When it comes to money, talking about it shouldn’t feel taboo. And yet, the conversation around personal finance remains an uncomfortable topic to broach for many. When Michael Katchen arrived on the scene back in 2014 with his new fintech investing startup Wealthsimple, he had lofty dreams of simplifying our relationship with money. Fast forward six short years and Wealthsimple has become a certified unicorn company with a valuation of $1.4B. And while they’ve certainly come a long way, their mission has stayed the same: to bring a sense of humanity to finance.
Bay Street Bull: You take a “human” approach to money and banking, which is a little ironic given that Wealthsimple is an artificial intelligence-driven platform. In your perspective, what does it mean to be human-centered?
Michael Katchen: It’s two things. It’s trying to create the most human lifestyle brand about money, which really just tries to talk in plain language, be simple, understand that money is this incredibly emotional thing for people, and telling honest stories about it to make it feel resonant rather than the way the industry typically likes to do it, which is to make it feel complicated, overwhelming, and scary. That usually puts people off from wanting to pay attention to it.
The second part is using technology to humanize the way we manage our finances. In the traditional finance world, to open up investment or banking accounts, you often have to go to the bank branch. And while that’s nice to be face-to-face with a human, it doesn’t really work with our schedule and the way we like to use products today as human beings. Using technology to automate it enables you to open an account from your phone in minutes. We think [all of this] restores humanity to the financial services system by making it feel human and easy, just like any product we’d want to use in our daily lives.
Bay Street Bull: What is your philosophy on money and the culture around how we talk about it?
Michael Katchen: One of the big problems is most people don’t talk about money. One of our brand campaigns that we ran a few years ago was about telling stories around money and this idea of breaking the taboo, making it okay to talk to people about the highs and lows, the stresses, the wins that people have when it comes to money. My belief is that when you don’t talk about money—when you don’t talk about it with your family, your parents, your kids—how are you ever going to learn to make better financial choices and not feel overwhelmed or scared of broaching those topics? I think one of the reasons that so many people end up making poor choices is they don’t feel comfortable asking anybody for the answer. One of the things we’re trying to do is make it okay to be honest. Ultimately, why we exist at Wealthsimple is the belief that everybody should have access to the best financial tools. It shouldn’t be that you only get access if you have a lot of money or a lot of knowledge. We think that’s a really powerful force for good.
Bay Street Bull: There’s this emphasis around democratizing finance. Where do the social values of Wealthsimple intersect with the company’s overall function and purpose?
Michael Katchen: The values that I hold in the highest regard for society are ones that create access. In my mind, a society that gives everybody access to the same starting line and set of opportunities is one that is an incredibly inspiring kind of thing to think about. To me, that really comes down to access to healthcare, education, safety, and the best financial tools because there’s no question that having a strong financial foundation provides access to all sorts of opportunities. We see ourselves as playing an important role of using technology to make those really smart financial tools accessible to everybody.
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Bay Street Bull: What do you think is the biggest challenge when it comes to financial literacy today?
Michael Katchen: We have somewhat of a controversial point of view on this. The reason why we need so much financial literacy education is because the industry has made products that are just too complicated. So, it has to then invest in these financial literacy programs to educate people about how to use these complicated products. Really what we should be doing as an industry is just build better products, make them simpler, make them more transparent, and empower people to make better decisions. We try to focus on making products that are intuitive and easy to understand so you don’t need a bigger financial literacy program to change behaviour. Our belief is that it’s really the industry that needs to play a bigger part in building more simple and transparent products.
Bay Street Bull: How can we make the conversation around money easier?
Michael Katchen: One of the challenges that the financial literacy movement has faced over the years is its obsession with retirement. Usually, the language that we use to talk to people we care about in terms of the importance of saving and investing is about this idea of needing to be in a place to retire. The challenge of that, especially when you’re trying to speak to young people, is it doesn’t resonate. It’s so far away if you’re just entering your career; we’re talking about maybe 40 years or more. To me, we need to come up with a new paradigm of how to talk to people about money and help inspire better choices and behaviours.
Also, historically the way you talk about money is in terms of returns: how much money are you planning to make or expected to make in the markets? I think one of the things we’re trying to evolve is introducing values to that conversation as well. Several years ago, we launched one of the first socially-responsible investment solutions in the country. Over the last several years, we’ve worked to iterate on that to make it better and more relevant for people that care about things like the climate. When you think about your investments, you’re not only doing it to make money, but you’re also doing it to invest in the future that you’d like to see for yourself and your kids someday. We think there is an incredible future for socially responsible investing where folks start to take a broader perspective on their investments. It’s not just about profit; it can be about values and social issues.
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Bay Street Bull: Earlier in the fall of 2020, Wealthsimple announced that it raised CAD $114M on a valuation of $1.4B, which propelled the company to unicorn status. What does it mean to achieve a milestone like that within Canada?
Michael Katchen: It’s exciting, there’s no doubt about it. There aren’t too many Canadian technology companies that really achieve large scale. I hope that this is just one of many more to come. I am a firm believer that Canada needs more really successful technology companies to preserve the prosperity we enjoy here in this country. If you think about Canada, we do two things: we pull things out of the ground and we finance that activity. That’s basically the entire story of our economy today, and if that’s the story we tell ourselves in 20 years, we’re in deep trouble. We have this necessity of diversifying our economy. I believe that technology is one of the great ways that we can do that, and in sharp prosperity for generations to come. We’re super excited because it is a rare thing here, but I hope that it is something that becomes less and less rare. At the same time, we’re just getting started and it’s an exciting step along the journey, but we have a long way to go to achieve our ultimate ambitions.
