Wealthsimple’s Tara Kennedy, vice president and head of capital markets, and David Mak, executive director, securities finance, speak to Carmella Haswell about the firm's growth from a managed investing company to a full service financial platform
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How do you assess the performance of Wealthsimple’s securities lending programme over the past 12 months?
David Mak: We have seen exciting growth and success from our fully paid lending programme. We built the product from the ground up by combining technological innovation with industry expertise. A third of eligible accounts have opted-in to the programme in less than 15 months of operation, and we continue to listen to feedback from clients on how we can expand and improve the programme.
How have market events and client demand in the past year shaped where Wealthsimple is today, and where the firm is heading?
Tara Kennedy: It has been an interesting few years for consumer finance. Moments like meme stocks and the pandemic saw a surge of retail investors entering the market faster than before.
Retail investors are looking for financial products that meet their needs, bring them greater value, and allow them to take control of their financial futures. It has created an enormous opportunity for us to build products and iterate our platform to best serve them. And our offerings are resonating.
We are averaging US$1 billion in net deposits per month. When you look at where Canadians are choosing to put their next dollar, it is with Wealthsimple.
Which regulatory initiatives will consume the most attention for your team in the next year? What investments and adaptations to working practices have you made to sustain and grow your securities lending activity in the current environment?
Kennedy: We invest in talent and expertise to build world-class teams in-house. We have been able to grow our securities lending services in Canada’s highly regulated environment by closely collaborating with our regulatory, compliance and product teams.
We have developed strong relationships with regulators in our journey from a managed investing platform to a full service financial platform. In the short term, we are advocating for greater adoption of automated investment account transfers. Unlike many other jurisdictions, there are no regulated service standards for account transfers in Canada.
Last year, nearly half of account transfers into Wealthsimple were sent manually — by fax, mail or cheque — a slow and unnecessary process when automated solutions are readily available. Canadian regulators have been working to increase adoption for automated transfers and we hope they are successful.
What do you see as some of the most prominent challenges and risks associated with securities lending, and how are they managed?
Mak: Education has been a key part of our rollout, ensuring clients understand what a fully paid lending programme is and what they are opting into. We want to ensure clients are able to make an informed decision on whether they do or do not want to participate in the programme, while providing them with full autonomy in making this choice.
Assessing the next 12 months, how will Wealthsimple be investing in its technology stack to provide for its clients, tackle periods of market stress, as well as advance its platform?
Kennedy: We will continue to identify opportunities to help our clients take control of their finances and educate them about the tips, tools and services that can support their savings goals. From a securities lending perspective, we have aspirations to grow our offerings even more. We are testing a few different avenues — including margin accounts — though it is still early days.
Wealthsimple is nominated for the ‘New Íø±¬³Ô¹Ï Finance Team of the Year’ category at this year’s SFT Awards. How do you feel about making the shortlist, and why do you think Wealthsimple should win?
Mak: We are honoured to be shortlisted for this award and to be included with our highly regarded peers in this category. We have sought to provide a best-in-class experience by unlocking value for our clients while balancing an ever-evolving regulatory and market dynamic.
By combining a unique blend of technology savvy and deep industry knowledge, we feel we have created one of the best fully paid lending programmes in Canada. Clients can digitally opt in or out daily at their discretion. Those who opt in can see their accrued earnings directly in the app, rather than waiting for monthly statements. Our programme gives our clients greater transparency and freedom over how they want their assets utilised. This is borne from our goal and culture to democratise finance for our clients and ultimately all Canadians.
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