My IGM Theory
IGM has stake in several investment and wealth management companies. IG Wealth Management is their primarily financial advice angle. The main drawback of IG Wealth vs a competitor like RBC Dominion Securities or even just financial planners at RBC is that they lack the steady stream of potential clients.
Whenever a client at one of The Big 5 Canadian banks needs some sort of banking advice, if they have decent funds or are interested in meeting with a planner it is a seamless pivot. It requires minimal effort on both ends, the client gets to stay with the bank they are currently banking at and comfortable with. The bank gets to develop a deeper relationship with the client making them less likely to change banks, and create more business with the client.
This is the biggest advantage traditional banks have in the wealth management industry over other wealth management firms that are independent. This is also the case currently for IG Wealth Management, but will it always be? That is what I find interesting about IGM Financials increasing stake in WealthSimple.
As of right now IGM holds a 25.1% stake in WealthSimple. I believe that this is a strategic play; not only due to the fact that WealthSimple is a rapidly growing financial platform that is extremely user friendly and seems to be the go to among the young generation. I believe this is there way of getting that same flow of clients that The Big Banks have.
They already have software in place that gives you offers, or bonuses when you reach a certain amount invested. All it would take is partnering with IG Wealth Management more formally; for example, you hit 250,000 in your account, you get a notification to meet with a financial planner. Low stakes notification you can simply click not interested. However, some people will be interested, high net worth people do not typically have the time to manage their own investments. Maybe their account balance is getting higher than they are comfortable with managing solo. Maybe they have wanted to explore financial planning but don't want to deal with the headache of transferring funds into a traditional bank.
Wealthsimple is clearly trying to become a competitor to traditional banks, introducing everything from chequing accounts to investment accounts and personal lending. One of the final things they'd need to complete the building blocks is a Wealth Management arm.
This is just a theory I have no evidence to indicate that I am not just thinking out loud, nor any evidence of IGM having this in their plans. I just think this would be a very smart play.
