Just a few days before the Canadian cutoff date for topping up RRSPs in hopes of a big tax refund (despite being in a time of heavy market volatility), Vancouver FinTech startups Cassia Research and TRIDUS have announced a partnership to give retail investors a chance to invest in a much smarter way. Cassia has developed a smart platform to put risk management technology used by some of the world’s biggest hedge funds in the hands of any investor, explains Cassia CEO Henry Bee; meanwhile, TRIDUS is using that platform to provide “the first paperless, office-less, full-service wealth management firm,” says TRIDUS CEO Harry McLaughlin.
“But just as we shouldn’t just sell seatbelts in Rolls Royces, every Canadian needs a seatbelt in their financial portfolio.”
– Cassia CEO Henry Bee
Their new partnership is founded on a premise that most Canadians are ill-served by their current financial advisors who simply can’t devote the time and resources to give retail investors the ability to make informed decisions like the dedicated wealth management firms. “We’ve had three crashes in the last 10 years and wealthiest have had better tools to ride out the storm,” Bee notes. “But just as we shouldn’t just sell seatbelts in Rolls Royces, every Canadian needs a seatbelt in their financial portfolio.”
Cassia says their SaaS web platform allows investors to outsource asset management with automated trading, rebalancing and asset allocation, or allow for a more hands-on approach, with the system providing critical guidance.
“The need for this new way of doing things is coming from both sides, from the clients and advisors who are feeling the pain of lack of innovation,” Bee adds. “Canadians are paying the highest fees in the world because the six big banks haven’t had to implement technology in the way they’ve done elsewhere. They have been able to ask for fees without providing tech-based advantages. Worse, they can only give their highest level of service to their largest clients. The rest get shuffled into mutual funds. It’s not the advisors’ fault – they want to provide that high level of service, but they haven’t had the tools, until now.”
Thanks to changes in banking transparency regulations coming in July, Bee and McLaughlin are confident that interest in their platform will go through the roof. “For the first time, customers will see the exact dollar figures of what they’re paying. Someone with $250,000 in savings and a retirement account is paying $420 to $625 a month for 2 to 3 percent management fee. That’s 40 to 60 times a Netflix subscription – and people pay attention when there’s a change in price at that level. This change in law is going to help people realize what they’re getting for what they’re being charged – and clients are going to demand lower fees.”
The way Canadians invest is already beginning to change and this innovation will help in the transition, creating win-win opportunities for both financial advisors and investors, McLaughlin notes. “In Canada 1.1 trillion dollars will transfer to the next generation in 15 to 20 years. Meanwhile, 72 percent of this next generation doesn’t want to stay with their parent’s advisor. We are creating a wealth management firm that is full service, full human interaction, and yet leverages the most modern FinTech in the industry to provide the best possible experience for next generation of investor and advisor… We can charge lower fees and still pay our advisors significantly more.”
While the need for this kind of solution in the marketplace has been understood for many years by wealth management experts, it would have been impossible for a new entrant to provide it until very recently, McLaughlin adds. “In the past, you had to invest in huge amounts of real estate and manpower. Today, we can be office-less and paperless – and with this technology you can scale really quickly.”