Redefining the boundaries of wealth management with OneVest

PortfolioApr 26, 2022

Written by Laura Lenz, Partner, OMERS Ventures

There’s something exciting finally starting to happen in Canada’s wealth sector. In a market that has been dominated by so few incumbents for decades, creating genuine change has been a challenge. But there are companies willing to take on the challenge. And OneVest is one such company. Rather than tackling the entirety of banking services head on, the company has quietly built a product that is as compelling for the end customer as it is for the financial institutions that implement it.When we first met Amar Ahluwalia, Jakob Pizzera and Nathan Di Lucca, it was immediately clear that if ever there was a team to tackle some of the biggest challenges in Canada’s financial sector today, this was it. Amar has spent his career in the Canadian financial services industry giving him a unique cross-functional perspective and the network to deliver on his vision. And Jakob and Nathan add top notch technical expertise. Their vision is clear: what Stripe has done for payments, OneVest will do for wealth. Today we were proud to be part of a group of fintech investors, led by Luge Capital, for OneVest’s CAD$5M seed round. There is an old adage that it takes money to make money. And the adage exists for a reason — for too long, wealth management has typically been reserved for institutions or high net worth investors that have the capacity to invest a significant amount of capital to get access to active, low-fee, professionally-managed funds. Until now. OneVest is the first of its kind to offer an embedded wealth management platform in Canada. This means retail investors can now gain access to institutional money management with no minimum investment commitment — not index-based funds, but active investment strategies managed by portfolio managers. As new banking infrastructure has emerged, such as financial data aggregators or banking-as-a-service platforms, consumers now expect orchestrated and real-time access to their financial information through digital, integrated experiences. Covid accelerated this shift. OneVest directly addresses this need by enabling banks, credit unions, FinTechs, and enterprises to embed modern investment services seamlessly into their existing product set, dramatically increasing the access to wealth management in a way not seen before. As Canadians, we tend to talk about the oligopoly of banking services in this country; and this concentration extends into Canadian household assets. The wealth management market in Canada is approximately $4.5 trillion and is controlled by the Canadian banks and insurance companies, such as SunLife and Manulife. Combined, these organizations control over 65% of the assets. Traditionally, disruption in this industry has been by long-term asset management executives leaving these dominant players and starting their own asset management firms. Great Canadian firms, such as Connor, Clark & Lunn, McLean Budden, and Picton Mahoney all started this way. But as access to financial information and trade execution becomes commoditized, an industry-wide transition to holistic financial advice is taking place. Historically, advisor-level service could only be accessed through these traditional channels (which only made financial sense for people with high net worth), or via an automated solution like a robo-advisor. Now, by using OneVest, any existing platform can embed wealth management services and provide the value of active over passive management as well as tax structuring and planning to retail investors. When we first met the team, we were intrigued by how OneVest was differentiating itself through this Wealth-as-a-Service approach. We have observed a growth in demand towards alternative assets (and away from ETFs) as retail investors seek allocations to ESG-focused investments, private equity, real estate, crypto, and other emerging asset classes. These alternative assets have historically not been available to retail investors based on limited distribution and high investment minimums. OneVest taps into this growing demand by making it much easier to offer consumers the products and services they are looking for. Today with OneVest, customers can access personalized and customizable investing, including goals-based, thematic-based, or responsible investing strategies. Looking forward, there is an exciting opportunity to democratize access to professional money management, both traditional and alternative, and that’s a compelling opportunity for Canadian investors. We could not be more excited to play a small part in this journey.