Wealthsimple CEO Michael Katchen on his not-so-simple mission: to help people — especially youth — build the foundations of financial freedom

The Toronto Star | | Sep 7, 2020

Michael Katchen - Wealthsimple CEO Michael Katchen on his not-so-simple mission: to help people — especially youth — build the foundations of financial freedomMichael Katchen won a stock-picking contest at the age of 12 — and promptly saw the shares’ value evaporate as the dot-com bubble burst. He’s been obsessed with investing ever since. Today, his Toronto-based company, Wealthsimple, is Canada’s best-known robo-adviser, with $8.4 billion in assets under management. With recent expansions into tax filing, saving accounts and online stock trading, and with investment giant Power Financial as majority owner, Katchen is using Wealthsimple to realize his mission: humanizing money.

Q: COVID-19 has created some distinct winners and losers. Wealthsimple falls very much into the former category, right?

MK: We have been very fortunate. As you can imagine, people are uncomfortable with the idea of going to a bank branch these days. That’s really helped our business. In addition, there has been a huge wave of consumers investing for the first time because when the pandemic hit and the markets took a big dive, many saw it as a great opportunity to buy in — coupled with the fact that they were at home and had more disposable time.

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Q: You’re an entrepreneur and now you have a giant financial empire as your boss. What’s that like?

MK: I give Power a lot of credit. They support our mission but they don’t tell us what to do or try to run the company. If it was different, as an entrepreneur I’d find it hard. Power has helped us accelerate our plans and think bigger, but our strategy hasn’t changed: We want to build the most human financial products company and fix one of the biggest problems in finance, which is that unless you have a lot of money, you can’t get access to great tools. We think technology can change that, but it requires trust, and building trust requires time and capital to develop the brand.

Q: November is Financial Literacy Month. What do you think of the level of financial literacy among Canada’s youth?

MK: I have a somewhat controversial view on that. I think we spend too much time talking about financial education and too little on building better financial products. The reason that we need so much financial education is because the products are too complicated and if people use them without understanding them, they get into trouble with things like excessive amounts of credit card debt. We should be building simple, transparent products and that’s totally ignored by the industry.

The second part is that financial education today focuses too much on retirement. Yet financial literacy is most important for young people, because they have the most time to get it right and achieve better outcomes.

A focus on retirement saving doesn’t resonate with folks just getting out of school, it feels so far away. We need a different ways to speak to young people about financial literacy that’s not, “Hey, in 40 years you’re going to wish you did this.” It needs to inspire them to take action now.

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Q: Your sister urged you to open an RRSP account at age 10. What do you think is the right time to start thinking about saving for retirement?

MK: The earlier, the better. I was fortunate to have someone in my life push me to do that. We have tools in this country that can help every single child learn financial literacy, which is the RESP account. The government will deposit free money for you from the time you are born and every kid is entitled to that money. Unfortunately, we have two million kids today that don’t have RESPs. We feel so strongly about this that we started a foundation designed to give a million kids from low-income families access to RESPs. To me, that’s one of the greatest ways to combat long-term wealth inequality.

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