We, at Wealthsimple, are cheapskates. One of our founding principles is: Do we really need to spend money on that? At least that's what Jason Goldlist, our thrifty general manager, likes to say. Part of the reason we started Wealthsimple is that we saw all kinds of entrenched inefficiencies in the banking business and knew we could build something better. Our business model is simple: Not only do we specialize in low-cost, passive investments; we refuse to spend money on the stuff the big guys do because customers ultimately end up paying for it themselves.
In other words, we're only cheap because we love you.
We buttonholed Goldlist, a man who's never happier than when using a tea bag for the second time, and got a list of nine things we'll never spend your money on.
1. Heated ATM Vestibules
Even though we don't have them, we have nothing against bank branches. They're great places to stay dry during thunderstorms, and who doesn't like free coffee and muffins? But bank branches aren't cheap. Bank of Montreal, for instance, spent about $500 million on office space and equipment rental last year and has spent over a billion dollars making capital improvements to its branches over the years. You don't ask us to redecorate your apartment, so we won't ask you to pay for any couches. Deal?
2. Fancy World-Headquarters Office Towers
There are many beautiful skyscrapers bearing the names of huge financial institutions. They are great places to visit on clear days if you are on a class field trip. They're also insanely expensive. From the boardroom in our third-floor headquarters in the humble West End of Toronto, you won't see the lake, but you might catch the guys next door at Auto Service Plus replacing the timing belt on a Volvo. We think you'd rather see our name on a perfectly balanced and optimized portfolio than the top of a building.
3. A Giant Desk for Our Chief Executive
Any idea how much an executive office suite costs to build out? We don't have the foggiest either, because our CEO, Mike Katchen, sits among us in our open-plan office. And no, Mike doesn't have a private jet... or even, for that matter, a private executive washroom. (As many of us can attest, he's a diligent hand-washer.)
4. Retirement "Specialists"
This is one of the most important ways we built a more efficient, transparent, and honest financial institution. A retirement specialist or consultant is a person who is paid a commission to sell mostly mutual funds to clients. It's often in the best interests of these "specialists" to steer clients toward funds that are managed by the banks they work for - the bank collects fees on those funds. Not to mention that study after study demonstrates that actively managed funds like mutual funds rarely outperform the market in the long run.
We employ experts (it's one of the things we are happy to spend money on) who are always available to give you investment advice. But our financial experts make the same salary regardless of how much they sell. We believe Wealthsimple has removed the sleaze factor from the equation.
5. Cumbersome Old Technology
If you want to make a room full of engineers laugh, tell them that the big banks still hire developers who know COBOL, a computer language that's been obsolete for decades. (They do.) It's really expensive and complicated for old banks to retire so-called legacy technology-the massive, fan-cooled 1980s-style mainframes that to this day fill football-field-size warehouses of bank real estate. Having been born in 2014 has certain disadvantages; Wealthsimple won't be permitted to legally drink until 2033 (or 2032 in Quebec!). But you benefit from our youth since we run on cloud-based technology that is vastly cheaper than the computing that came before. All of our data is handled by Amazon Web Services, a company trusted not only by organizations like Netflix and NASA but also by Jeff Bezos himself to secure all of Amazon.com's data.
6. Free iPads
Banks love luring customers with swag. Fifty years ago, it was a free toaster when you opened a savings account. Now it's iPad minis and Visa gift cards. Our philosophy: What's lamer than a party where you have to pay for your own presents? We think if you wanted an iPad, you'd buy one.
7. Talking to People When You Don't Want To
At most banks, you still have to call to open an account-and to do lots of other things. We believe you should talk to someone on the phone only when you want to. Like when you want advice, or to review your investments. Wealthsimple's website and app and the technology behind them make signing up, as well doing virtually everything else you need to do, simple and, we hope, even enjoyable. Talking to people only when they want to talk means we don't have to contract out to expensive call centres. And it means when you do call, you'll have a higher-quality experience.
Why do all banks spend way more on unnecessary stuff than we do? That's easy. They don't have secret weapon Leen Li, our head of finance and the most tightfisted MBA in North America. We love Leen for a variety of reasons-she recognized that bottled water wasn't great for the environment or Wealthsimple's bottom line, so one day an office filtered-water tap materialized. All the copiers in our office are set to double-sided printing thanks to Leen's obsessive thrift. But what we love most is that our in-house fat-cutter is actually named "Leen."
We're about as close to paperless as a business can be. Notice that you didn't have to fill out one single sheet to invest with Wealthsimple. And while the big banks send out forests' worth of paper statements, we put all our resources into making our site and mobile app so beautiful and intuitive that you'll easily be able to chart your own progress without having to open an envelope. But here's the dirty secret of statement-happy banks-it's not the paper that costs the most but the armies paid to keep the printers going, refill toner, replace broken hardware. We've got no beef with you, noble toner replacers, but our clients would rather pay lower fees than your salary.
And a Few Things We Do Spend Money On
We do believe, of course, in investing in things that make a difference to our clients. First and foremost is people. The best financial minds, the best creative minds, the best designers, engineers, portfolio managers. We're happy to offer great health insurance and really good cold brew (and yes, a Ping-Pong table) if it means making a product that people are going to really love. We also make those very same great people available to you on demand; if you need a question answered by a human, your call will ring right inside our headquarters and be handled by our relationship managers. That's right: You will talk to an actual non-robot at our office without having to be transferred!
And we're always looking for more great people-if you're a talented software developer, you should check out our Jobs page and consider spending your days with us. Ping-Pong skills a plus.