SEC approves Wealthsimple for U.S. launch

Wealthsimple has been cleared by the SEC to serve U.S. clients.

The Toronto-based robo-advisor, which also has a New York office, received a 120-day approval from the SEC in October to be an investment adviser firm.

Headed by chief executive Michael Katchen and backed by Power Financial Corp., Wealthsimple aims to surpass $1 billion in assets under management in 2017 after entering the year with about 15,000 Canadian clients and about $750 million in AUM.

Earlier this month the robo-advisor launched Wealthsimple Black, a premium service for clients with portfolios of more than $100,000. The service offers lower fees of 0.4% and advice for reducing taxes on investments. Wealthsimple advisors are available on the phone or online.

Read: Artificial intelligence, overseen by humans, key to new robo

FinancialPlanning.com, which reported the U.S. expansion on Tuesday, says Wealthsimple will be releasing an American version of its service as soon as this month and that it’s also planning an office in London.

“The Canadian market is one tenth the size [of the U.S.]. That’s why they remain in the hundreds of millions of AUM to date,” Will Trout, senior wealth management analyst for Celent, told FinancialPlanning.com. “Their fees are reasonable by Canadian standards but will have to be dialed down for the U.S., meaning even slimmer margins.”

Wealthsimple, founded in September 2014, charges a 0.5% management fee and would be competing with established online players Wealthfront and Betterment if it’s planning a full U.S. expansion. California-based Wealthfront has more than US$4.5 billion in AUM and New York-based Betterment has over US$5 billion.

The firm may also be going after clients with cross-border ties. There are about 1 million Americans in Canada.

Wealthsimple says it will have more to say in the coming weeks.

Read: Wealthsimple to offer personalized advice, tax help

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Comparison of Canadian robo-advisors