A unit of Purpose Financial, founded by Som Seif, seen here, is buying Wealthsimple for Advisors.Della Rollins/The Globe and Mail
Som Seif’s Purpose Financial LP is making a major move into the financial-adviser business by scooping up Wealthsimple for Advisors.
In a deal announced on Thursday, Purpose Advisor Solutions – a subsidiary of Purpose Financial – will acquire robo-adviser Wealthsimple’s business-to-business division, Wealthsimple for Advisors. No financial details were disclosed.
Managing about $1-billion in assets, Wealthsimple for Advisors first launched in 2017 and now has 500 independent advisers who access the online company for back-office services.
“Our vision is to help advisers succeed and thrive in the digital marketplace,” Jeff Gans, CEO of Purpose Advisor Solutions, said in an interview. “The combination of two dedicated teams – as well as innovative technology and operational efficiencies – will unlock new business possibilities for independent advisers and investment firms in Canada.”
Wealthsimple’s CEO Michael Katchen announced last month he was looking for a partner to take over the business-to-business (B2B) segment after a strategic review found the company – which includes a retail consumer business – was “gaining scale at a greater pace than originally anticipated.” As a result, Mr. Katchen said the company made the decision to focus on its “core” consumer business.
Pending regulatory approval, the deal is expected to close in the next six months. It will also see a team of about 15 Wealthsimple employees move to Purpose Advisor Solutions – including Dave Nugent, chief client officer for Wealthsimple for Advisors and one of Wealthsimple’s first employees. Both Mr. Nugent and J-F Courville, CEO of Wealthsimple for Advisors, will join as managing partners of Purpose Advisor Solutions.
“Joining forces with a team who is completely focused on the adviser market will propel this business forward,” Mr. Courville said in an interview. “We are committed to advancing the adviser industry by elevating the quality and accessibility of services through powerful technology.”
Mr. Gans said his company currently allows financial planners, accounting firms and other independent professionals to provide outsourced investment management to their clients. Prior to the Wealthsimple deal, Purpose Advisor Solutions managed about $500-million in assets for seven independent adviser teams. This is the first major acquisition for the company since launching in 2018.
The deal comes at a time when Canada’s investment industry is facing rapid changes in technology that could provide independent advisers a more cost-effective way of servicing clients outside of large brokerages – a trend in the United States for quite some time.
Mr. Gans said now is the time to “innovate in the financial-service industry” to create more options for Canadians, something the U.S, marketplace has been successful with in the fast-growing registered investment adviser (RIA) business model, which enables advisers to operate independently of large brokerage firms and provide a legal fiduciary obligation to clients.
“Different business models work for different client segments, and that has helped push the prices lower in the U.S.," said Mr. Gans. “Because there’s more options for advisers, it’s forced other firms to innovate at a higher pace than they were before.”
“And at times, the Canadian marketplace has been a little slow to innovate, because there is fewer firms.”
Over the last several years, Mr. Seif – a longtime advocate for low-cost investing for Canadians – has been expanding his business beyond exchange-traded-funds company Purpose Investments. In 2017, a division of the Ontario Municipal Employees Retirement System (OMERS) bought a minority stake in Purpose Investments.
Mr. Seif then created Purpose Financial – a broader financial-services company that, in addition to Purpose Advisor Solutions and Purpose Investments, went on to acquire online lender Thinking Capital, point-of-sale financier CreditGenie Inc. and Ario, a technology firm.
With a file from Brenda Bouw
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Clare O’Hara