This time in our series, Nick Hungerford, the Portag3 Ventures partner and Nutmeg cofounder, explores how the shifts in the demographics with capital will come to define wealthtech.
Financial Services has an interesting dynamic in terms of growth, to think about that generational change and how fast is going to happen both for incumbents to come to the middle and for technology companies to establish themselves with with wealthier consumers.
You know, you have traditional financial services businesses, you have traditional financial services customers, and then you have younger companies who are thinking, come on when is this generational shift is is going to happen. And the same is true with with wealth management, I wouldn't say it's divided so much into old and young, there's probably more first time investors and experienced investors.
And now, we see just more and more experienced investors turning around and saying, 'Why am I paying the fees for a traditional wealth manager, I'm not getting the performance that those fees deserve. I get great service online, so I've got to move my money.'
Those deposits are larger and things just start to move faster and faster and faster. We're at a point now where, certainly for the technology companies who are building financial solutions and for the incumbent companies looking to incorporate technology, they actually have a responsibility to keep up with the consumers demand for the pace of change.
Online wealth management has has a lot of parallels with dating. When dating started on the internet, everybody was saying 'Wow, that is that's totally weird. That's totally weird'. But if you spoke to an 18/19/20 year old now and told them that they had to do dating without the internet, I think they would look at you like you were completely mad. I don't necessarily think that online dating started with lots of old people it was probably mostly young people. And then slowly, slowly, slowly, [it becomes the norm to use] eHarmony and even Tinder.
The same is true for online wealth management. Now when we started, I remember thinking, 'Okay, here we go, this is going to be the next big thing, it's going to be huge. And then in the first hundred days we had probably less than 100 customers. And now we probably get that much every day.
Fast forward and you see the growth of companies like Wealthsimple in Canada and the UK with just absolutely crazy growth.