Betterment announced Thursday it has acquired Toronto-based robo-adviser Wealthsimple Inc.’s U.S. book of business, which manages $197 million in assets and more than 17,400 clients.
Wealthsimple will transfer all of their existing U.S.-based customers to Betterment, and will no longer support accounts based in the U.S, according to the announcement. Betterment will only be acquiring Wealthsimple's U.S.-based customers and their account assets; they will not be acquiring its technology, employees or operations as a part of this deal.
Wealthsimple accounts will be transitioned to Betterment by June. Meanwhile, Wealthsimple customers will have the option to opt out of this transfer.
Wealthsimple’s U.S. clients and assets sale represent a shift by Wealthsimple to focus on its core Canadian business, said Michael Katchen, co-founder and CEO of Wealthsimple.
The move makes sense for Wealthsimple, which manages 8.4 billion Canadian dollars and has more than 1.5 million Canadian users, as of October 2020. Wealthsimple has also grown its trading mobile app — Wealthsimple Trade — to more than 280,000 users since its launch in the Canadian market in March 2019.
“The U.S. robo-adviser space is far more competitive than the Canadian market, and Wealthsimple has struggled to gain a strong foothold in the U.S. market despite having a quality service,” said David Goldstone, head of research for Backend Benchmarking.
The difference in adoption between the two markets helps explain why Wealthsimple sold its U.S. assets and is concentrating on the Canadian market.
“Focusing on the Canadian market will allow them to deploy the recently raised $87 million into their fast-growing Canadian business in preparation for a potential IPO,” Goldstone said.
In October, Wealthsimple announced the $87 million funding round that made it the latest tech unicorn with a valuation of just over $1 billion dollars.
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