Fintech giant Wealthsimple found inspiration for its Monthly Millionaire program overseas, in a 70-year-old British savings program that offers prizes to encourage people to save.
Premium Bonds don’t pay interest. Instead, every £1 held gets a bond number in a monthly prize draw. Prizes range from £25 to £1 million. Bond holders can withdraw their money without penalty, effectively trading guaranteed interest for a chance to win.
Wealthsimple’s version launched in May. Clients register and open a chequing account to earn 500 entries. Each month, every $1 they add in net deposits gets them another entry. Setting up direct deposit doubles their total entries. And a successful referral adds 5,000.
“We were spending a lot of money on Facebook and Google ads,” Simon Lejeune, the company’s chief growth officer told me in an interview. “I thought, why can’t we take that money and put it right back into our clients’ pockets. … These campaigns are way more efficient than traditional marketing.”
The company — which reports on a calendar-year basis — saw a whopping $17 billion in net inflows in the second quarter, up about 55% relative to the previous three-month period. “That was our biggest quarter ever,” Lejeune said.
To put that number into context, RBC saw $9.8 billion in net new assets across its entire wealth management business during its second fiscal quarter, ending Apr. 30.
Thanks in part to market effects, Wealthsimple topped $155 billion in assets under administration on June 30. That marked a 24.7% increase in comparison to March 31, and an 84.1% jump year over year.
A war for assets
Qtrade is spending to attract investors, too. It offers up to $2,000 to new clients who transfer $200,000 or more. This summer, TD Wealth has been paying clients $1,000 if they open two or more eligible accounts and transfer at least $150,000 in investable assets. Both firms, and Wealthsimple, also reimburse transfer fees.
Other firms are focused on advisor recruitment. Mark Toren, president & CEO of the search firm Toren & Associates, reported for Advisor.ca in April that bank brokerages are paying about 1.5-times revenues for book transfers, while the independents are offering more attractive packages. It’s a viable strategy given the industry’s extraordinary profitability.
Direct-to-consumer campaigns are tricky for a lot of wealth management companies, in particular the independents. Their long-held view that advisors own the client relationship is fundamental to how the business works. Advisors, successful ones anyway, enjoy sufficient leverage across the industry to make an executive think twice before marketing directly to investors.
In an age of empowered consumers however, that may need to change. Lejeune told me that Monthly Millionaire triggered action by a million clients faster than any other campaign they’ve launched.
“It took very little time,” he said.
