Ep. 163. Interview Toby Triebel, Wealthsimple
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JB:	Welcome to Fintech Insider Interviews. I’m Jason Bates, from 11FS, and today, I have the pleasure of speaking with Toby Triebel, CEO for Europe of Wealthsimple. Thanks for joining us, Toby.
TT:	Thank you, Jason, it’s a pleasure to speak to you.
JB:	So, tell us about Wealthsimple. For those people who don’t know the company, what do you do?
TT:	Yes, absolutely, it would be my pleasure. Wealthsimple was born out of the idea that everyone, no matter their age or income, should have access to smart financial products and investment advice. We would like to make investing easy, accessible, transparent. How do we do this? We provide people with smart investment portfolios, that help them reach their goals, no matter whether that’s saving for retirement, saving for their children, or just to put some money aside for a later stage in their lives. We were founded in 2014 in Canada, and we now have more than 40,000 clients, managing more than $1 billion US in assets.
JB:	So, wow, over the last, I guess, what, is that three years now, that’s a scale to $1 billion Canadian dollars. How did you manage to scale so fast?
TT:	When we were first founded in 2014, digital investing wasn’t common practice in Canada, no one really knew about it, there weren’t many-, any players out there. And we spent the first years educating people on the importance of long-term investing, and speaking to people about the why of investing, rather than the how, and our partnership with Power Financial, which we entered in to quite quickly after we went live, was a huge step in our path towards starting to realise our dream of becoming a global player, a global online investment platform. Power Financial, they have $1.4 trillion in assets, they’ve got an international footprint, and they’re really a true partner to us. And we’ve been able to scale outside Canada, because of all the lessons that we learned inside Canada. How to grow a business, how to acquire clients, how to build trust, how to build a brand. And we launched in the US earlier this year, and we expanded to the UK as our third market as recently as two months ago.
JB:	I guess we’ve seen a variety of companies, recently, who started in the B2C space, move in to the B2B partnerships, Scalable Capital, another roboadvisor, Bud, a company that I’m involved with, both, I guess, started with that B2C, and moved to B2B, or B2B2C, in order to grow scale. Is that how you see things, too?
TT:	Absolutely. I mean, we are very much focused on B2C in the UK, as we only just launched. Having said that, in Canada, we have a B2B offering, as well, where we work with financial advisors, we work with large institutions, and offer various partnership models, one of them being a white label solution, where we make our platform accessible to the clients of our partner, and that is, ultimately, one way to scale very quickly. Having said that, the B2C side is, is a big focus for us, and we see a tremendous opportunity across all three countries that we operate in.
JB:	So, how do you differentiate Wealthsimple from the other big roboadvisor players out there today?
TT:	Well, where do I even begin? [Laugher].
JB:	[Laughter].
TT:	The biggest-, the biggest way we think we stand out from some of the other players is-, is really that we provide a hybrid approach, through a combination of human and tech expertise.
JB:	Mm.
TT:	So, we offer on demand advice to clients, from real, accredited, from qualified financial advisors, or investment advisors, as they’re called in the UK, and that, I think, is very important. We want to humanise money, we want to humanise the act of investing. So, you can sign up on Wealthsimple very easily online, or through an app, you can fund your account, you can see your investments grow. However, at any point in time, all of our clients have access to a qualified investment advisor, and that, I think, is very, very important, because investing can be-, can be overwhelming. It is difficult. And we want to humanise that.
JB:	Yes, I was talking to a-, a big wealth bank in the UK recently, and they were talking about, still, the-, the need for that personal touch, especially when you’re talking about very large ticket investments, that really aren’t at the lower end of the market, where someone might put a few hundred pounds away. Where do you see robo advice playing, and, I guess, Wealthsimple, specifically, in that market? Is it for people who really are just putting a few hundred pounds? Or people who are putting hundreds of thousands of pounds or dollars?
TT:	We like to attract a broad range of clients. Millennials are an important part of our customer base, but we generally tend to appeal to people that like technology, that want an offering that is easy and intuitive to use, and we’ve got a very streamlined and easy, and-, and hopefully great user experience for our clients, and the range of clients is very diverse. In North America, we have a client that is 104 years old. Having said that, our youngest client is probably just born, through the JISA offering, which is a tax efficient tax wrapper for children in the UK. So, it’s really a broad spectrum of clients, and we want to make investing accessible to anyone, no matter their age or income, and we really believe in that.
JB:	Mm. So, roboadvisors, or the term, seems to hide a variety of models, a variety of journeys. In some ways, someone described it to me recently, to say, “It’s not robo and it’s not advice.” You know, it doesn’t use AI, it’s not clever, and, you know, in the end, it’s advising people, or looking at risk profiles, and then putting them in to a portfolio bucket. Is that a similar approach to the one you’re using? Or, how does the user journey work?
TT:	I don’t think I agree with everything that you just said about robos. We don’t love the term either, because we’re human. You can speak to someone at Wealthsimple any time you want, whether that is just someone on the customer service team, to help you with the signup process, or to answer any questions you may have, or, as I mentioned, you have access to an investment advisor, who can really provide restricted investment advice.
JB:	Mm-hm.
TT:	We deem the client journey, or the outcome of it, the recommendation, after the risk questionnaire, we deem that as-, as advice. We are regulated by the FCA, we are authorised to provide investment advice to retail clients, and we are authorised to provide discretionary portfolio management.
JB:	Mm-hm.
TT:	So, back to the client journey. It is really extremely easy, and you can go through it within five minutes, without any human interaction. You sign up, you answer 12 questions, in the UK, it’s very quick, to assess, your knowledge and experience, your financial circumstances, your capacity for loss, and your investment experience.
JB:	Mm-hm.
TT:	And, based on that, we recommend a portfolio to you, that-, that has a broad diversity of funds, in both equity and fixed income, that is both global and diversified. That is pretty much it. You can then go on, open accounts, tax efficient accounts, such as ISAs and JISAs in the UK, and the equivalent thereof in the US, and in Canada, and then you can go ahead and fund your account. And that’s pretty much it, it is really that simple.
JB:	That’s great. It does sound like an interesting new hybrid model, where, I think we’ve seen a variety of players come through, who seem to be, I guess, copying, you know, the bigger players in the US.
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JB:	So, how do you acquire customers? Let’s get to the business model questions, like, how do you make money, how do you acquire customers? Let’s start with, how do you acquire customers?
TT:	Yes, absolutely. So, our growth strategies have changed a lot since we founded the company, three and a half years ago. In the beginning, we were very much focused on growth channels that didn’t necessarily scale, and we were much more focused on word of mouth tactics, to build customer trust and overall credibility. And now, we’re sort of at a stage where we’re really building a brand, a lasting, independent brand that humanises investing, that humanises financial services, and we think that is a gigantic opportunity for us. So, in the US and in the UK, we can very much build on the experience, and lessons learned in growth the brand in Canada, and we’ve been looking at a variety of tactics to attract people through growth and marketing initiatives, and one of them, one of my favourite ones, is-, is running the great ad campaigns that we’ve become very much known for. One of them is Mad World, which you may have seen.
JB:	Mm. Yes. I also saw the Wealthsimple Money Diaries. Can you tell us a little bit about that? That seemed quite interesting.
TT:	Yes, we love our Money Diaries series, and, let me tell you a little bit about it. So, our founder, global founder, Michael Katchen, he, back in the day, he convinced his friend, Rudy Adler, to join the founding team, and start building a brand that would break through the noise of financial services, and talk about financial decisions that people actually care about. Earlier on this year, we brought on board the former GQ Editorial Director, Devin Friedman, and he has really driven the Money Diaries series, when he joined, and the idea, really, behind the Money Diaries, is to speak with interesting people about their relationships with money. Some are-, you know, some Money Diaries are hilarious, others are incredibly touching, but, most importantly, all of them are very human, and that is very important for us. We understand that investing is complicated, and can be overwhelming, and we would like to humanise it, we would like to make it simple. One of the Money Diaries series that I like a lot is Elijah Wood, where he reveals that he, to this day, is still nervous about making huge purchase.
JB:	Mm-hm.
TT:	I also like Jon Hamm, who told us that he-, he just wishes that he had enough money to buy a time machine, that would take him back to Italy during the Renaissance period. So, we have a lot of examples of that, and you should definitely take a look.
JB:	And where can listeners find those Money Diaries?
TT:	They can find them on our blog, or we call it magazine, at Wealthsimple.com, or, on the-, on the app.
JB:	I’m fascinated by this human angle, because that’s something that, 11FS, we often talk to customers about, and banks, as clients, this idea that, actually, digital can be the coldest channel known to man, because it has the absence of people, but, when it’s used at its best, it can be the most personal, the most interesting. And I guess what interests me through this conversation is the use of the Money Diaries, the use of people, and the ability to contact those, and also, I notice that you offer social responsible investing. Does that ethical investment also play in to this human-, humanness?
TT:	Absolutely. It is hugely important for us. We started offering SRI portfolios in Canada, back in 2016, and in the US earlier this year, and, what we’ve found is, 35% of our clients in North America have at least one account in an SRI portfolio, so that just shows you that our clients value social responsible investing, and they have demanded it, and we have responded by offering what our clients would like. We listen to them, and we offer what they would like, and socially responsible investing is just one-, one area.
JB:	And I also notice that you’ve also taken one of those other angles we talk a lot about, in terms of partnerships and APIs, and that you-, you did a partnership with Mint last year. Can you tell us a little bit about that?
TT:	Yes, so, the partnership with Mint is in the US. We strongly believe in making smart financial decisions accessible and transparent to people, and it felt a bit like a no brainer, to partner with the brand that enables their clients to have a full picture of their financial wellbeing. So, our partnership with Mint allows clients to integrate their Wealthsimple account with their Mint dashboard, to include investments as part of their financial overview, and it’s all about making investing accessible, easy and low-cost, and the partnership with Mint is a great example of that.
JB:	So, we also asked some people on fintechinsidernews.com to suggest some questions. So, I’d like to just give you a couple of those. Firstly, there was a question on how you, essentially, establish yourself and compete in the market. I think we’ve covered that already, but a second question was about whether you’re looking at institutional investors, and whether the product appeals to, for instance, pension funds. Is there anything-, is there any plan to look broader than the consumer offerings?
TT:	The focus definitely is on the consumer, but I did mention, in the beginning, that we do offer a B2B product, as well. I guess I’m not 100% sure on the question.
JB:	The precise question was, how are the new wealthtech players looking to work with institutional investors, whose data can’t be personalised? So, I guess it’s less the-, well, just as you say, it’s a B2B offering, rather than a B2C, and therefore, I guess the question comes to, who are your competitors, and where are you differentiating, or competing? Is it in the asset management space? Is it in the banking space? Is it in the wealth manager, the private bank, the independent financial advisor? Which piece of the existing market are you competing with?
TT:	It is probably all of the above, to some extent, and-, and none of them, to another extent. We want to make investing available to everyone. There are a lot of people, in the UK, and elsewhere around the globe, that do not have access to investing, they do not have access to financial services, partly because they may not have the minimum investments required by independent financial advisors, or they simply do not want to pay the very high fees that those advisors offer. We would like to make smart investing accessible to everyone, no matter their age or income, no matter whether they have prior investing experience, or not, and that, I think, is very important. So, it’s a very broad answer, I guess.
JB:	So, what’s the business model? How do you-, how do you pay the bills?
TT:	How do we pay the bills?
JB:	Yeah, how do you make income?
TT:	So, ultimately, like a lot of other technology-driven companies, our business model is one of scale, and we need to grow, in order to operate at a profit. We charge clients a management fee that, in the UK, ranges between 50 and 70 basis points, that includes everything. It includes the investment advice, it includes the calls to our investment advisor, it includes the construction of the portfolios, the trading, the rebalancing, the dividend reinvesting, statements, etc. But, we’ve built a business that uses technology to reduce the overhead costs of traditional financial institutions, and we also build all the technology in-house, and we can thus offer our platform, our products, across all of our geographies, and thus, sort of, leveraging our platform internationally. And our perspective is very much that we’re making long-term bets, and we’re patient in what we’re building, and an important part of that is-, is very much our partnership with Power Financial, one of the largest financial services conglomerates in the world, and they have allowed us, or they’ve given us, the runway to put strategies in place, to become a global leader in the investment management space.
JB:	So, that’s great. We often ask our interviewees just a few questions about their careers, and about, I guess, productivity in teams, because I think there’s a lot of people interested, at the moment, on how the new organisations work, and how they manage to do so much in such little amounts of time, and money, I guess. So, how do you-, how do you lead? How do you maintain productivity and focus within the company?
TT:	Personally, because I-, I think I need to get organised, and be productive, myself, as well, so, what I’ve found over the last year that works-, what works very well for me is setting two to three high-impact goals every night, to be achieved over the next day, and that lets me focus on the important, on the high impact things and issues at hand, it keeps me motivated, and it, sort of, focuses me to think about the larger picture, rather than getting-, getting caught up in small details, or in the daily madness. What it means for the broader team, and we are 130 people worldwide, and in the UK, where I’m based, it’s eight of us, we are a very small team, and we-, as the leadership team very much takes a real interest in every single team member, and there’s a genuine caring for each other at Wealthsimple, that is very much our culture, which I think is very important, another aspect of how we manage our company is transparency. We are very open and transparent with the team as to what the priorities are, what we are working on. We share board documents internally. I think transparency is one that motivates people. When-, when you can all come together, and work on the same goal, and you’re all on the same page, I think that-, that works very well, and we are very much a horizontal company. Everyone chips in when there is a problem, no matter what their role is. Personally, I still speak to clients every day, and I very much enjoy that.
JB:	So, what’s the best career advice you’ve ever been given, or received?
TT:	Very early on in my career at Goldman Sachs, a senior partner just told me one thing. He said, “Ask questions first, and then respond, then sell, and then bring across your point, but understand the counterparty first, before you sell.”
JB:	That makes sense to me. I think-, I love the fact that so many companies, at the moment, seem to be finding their way to these mission-driven businesses that have transparency and openness, and small teams delivering, you know, great fintech solutions. There seems to be a-, a real wave of interview after interview, or client after client, who are saying very similar things. Do you think that that’s part of a broader trend?
TT:	I would hope so. And we are certainly here to make that happen, and our vision is to become a global player, and that’s what we-, what we try to do every day, and we would very much welcome a collective effort, from a lot of other players out there, that would share a similar approach.
JB:	Well, that’s fantastic. Toby, it’s been amazing to talk to you. Where can people find out more about you, and/or Wealthsimple, and find out more about what you’re doing?
TT:	Absolutely. You can just go-, go to Wealthsimple.com, or find us on the App Store, it’s available to download both for iOS and Android, it’s very, very easy to find us.
JB:	Perfect. Toby, thanks so much for joining us. It was a pleasure to talk to you.
TT:	Thank you, Jason.
JB:	And don’t forget, you can find 11FS, the people who bring you this podcast, a challenger consultancy that creates and launches next generation finance propositions for clients, taking a startup approach to making a difference. Come talk to us @11FSteam on Twitter, or hello@11FS.com, if you want to drop us an email. If you like what you’ve heard this week, don’t forget to subscribe to our podcast, and please leave us a review on iTunes, we love that. Thanks for listening. Goodbye.
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