Financial services conglomerate Power Financial Corp., is entering the robo-adviser business with an investment of up to $30-million in Toronto-based startup WealthSimple.

Read: Canadian banks considering robo advisors

Power Financial — which is the parent of the Great-West life insurance company and IGM mutual fund group, will invest $10 million now in WealthSimple, with the option to invest another $20 million over the next 12 months.

The WealthSimple online investment manager launched in September and since then has secured more than 1,000 clients.

WealthSimple bills itself as a low-cost alternative to traditional types of investment advisory services and products.

Robo-advisers use questionnaires to determine investors’ appetites for risk, then invest clients’ assets into portfolios made up of exchange-traded funds (ETFs). The portfolios are rebalanced using algorithms.

Some robo-adviers, including WealthSimple, also have investment advisers available via telephone, text or video chat to answer questions.

WealthSimple says the investment will allow it to grow its team of technology and financial experts, increase its marketing efforts and give it access to a larger roster of investment professionals.

Read: Should you worry about robo-advisors?

Robo-advisers tend to appeal to tech-savvy young professionals who don’t have enough assets to warrant hiring a full-service investment adviser, but don’t want to pay hefty fees for mutual fund projects.

While many larger institutions charge as much as 2.5% of a client’s assets in fees, online investment advisers charge as little as 0.3%, depending on the client’s account size.

“We believe in the value of financial advice for everyone and see the WealthSimple model as a way to appeal to under-served segments of the Canadian population like millennials and those with more modest assets,” Power Financial’s vice-president Stephane Lemay said in a statement.

“Wealthsimple has been able to reach this market.”

Read: Why you may need a robo-advisor

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Canadian investors are not benefitted as they are unable to reach the services of many global financial powerhouses. The presence of HSBC, Fidelity, Invesco, Vanguard, BalckRock and interactive Brokers are quite limited and they are unable to reach most clients as independent brokers /advisors are diminishing in Canada. The technological advancement may help the global leaders to shine in Canada as the tech savvy clients do the math and compare the outstanding service, investment performance, advanced trading platforms, high end account and tax reporting and the overall cost to maintain an investment portfolio (MER/TER) of the global institutions with Canadian ones.

Thursday, April 9 @ 7:46 pm //////


When clients do a risk questionnaire, it’s usually comes back as “low”. If I had invested for them based on a questionnaire allocation model; I’d been fired ten times over by now.

Thursday, April 9 @ 5:33 pm //////

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