In the past couple of years, a new way to invest has surfaced: sleekly designed online investment advisors, such as Wealthsimple and ModernAdvisor. Here’s how they work. Anyone eager to move their money out of a traditional savings account signs up and enters a series of questions about their goals and tolerance for risk. Then one of the site’s advisors uses those answers to build a customized portfolio, and plops the cash into an assortment of its investment products.
Because such sites invest heavily in technology, they’re easy to use. “We’ve created a user experience that’s, you know, awesome,” says Michael Katchen, the 28-year-old founder of Wealthsimple. “It sounds silly, but our interface is as simple as Uber’s.” Clients can download the app and swipe through eye-catching charts to track their savings. They can also chat with real-life advisors over the phone.
But they won’t get to meet them in person: the entire experience is virtual. This helps keep costs down. “We don’t have retail locations or make in-person house calls, and we can pass those savings onto our customers,” says Katchen. “That comes in the form of low fees, so you don’t pay as much as you’d pay traditional advisors.”
Katchen hopes, above all, to inspire young people to start investing early. “Compound interest is so powerful,” he says. “No matter where you put your money, it’s so important to just get going.”
This story is from our Fall 2016 issue. Looking for more money talk? Check out our cover story, in which we find out how lawyers spend their money.
Illustration by Alina Skyson