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Technology > Investment Platforms

The Next Fintech Movement Coming to the U.S.

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As the financial technology, or fintech, industry continues to expand and become ever more important in wealth management, new and emerging market opportunities are rapidly shaping how independent financial advisors will work with clients and manage their businesses.

One of the more prominent developments the industry is experiencing is the latest invasion by Canadian fintechs targeting the hundreds of thousands of financial advisors managing the trillions and trillions of dollars in investable assets residing in the U.S.

“We are seeing more and more established and startup technology companies from Canada now entering the U.S. market,” said Joel Bruckenstein, industry tech guru and producer of the T3 technology conferences. 

“This is happening for a number of reasons, most notably the vast size of the U.S, wealth markets and a strong U.S. dollar, which means they can grow much more quickly, profitably and achieve higher valuations by targeting financial advisors here in the States,” Bruckenstein explained.

Plus, he adds, there are “more and more private equity and venture capital investors focused on the U.S. wealth tech space that they can tap into for growth capital to expand their businesses beyond their relatively much smaller home markets.”

Cross-Border Players

The most recent example of this PE and VC money crossing the U.S. and Canadian borders is CapIntel, which focuses on day-to-day workflows and fund analysis for financial advisors and is opening up shop in the U.S. CapIntel recently announced U.S. $11 million in Series A funding led by the New York-based FinTech Collective with participation from Fengate Asset Management on behalf of its investor, the LiUNA Pension Fund of Central and Eastern Canada.

Since launching its platform in 2019, CapIntel experienced nearly 800% revenue growth in 2021, following 640% growth in 2020, and it is now used by more than 10,000 advisors serving more than 2 million households.

CapIntel plans to hire at least 150 new team members over the next two years, focused on building out its sales and product teams after the recent expansion into the U.S. market. Its platform addresses the perennial challenges of engaging and presenting investment solutions to clients along with the preparation of investment proposals. 

Another example of recent cross-border fintech investment is Conquest Planning, a financial planning software platform created by Mark Evans, a longtime Canadian technology innovator.

This is actually Evans’ second financial planning software venture from Canada targeting financial advisors in the U.S. His first foray happened over 30 years ago with the launch of the well-known NaviPlan, which has subsequently been passed around by various wealthtech platforms and insurance companies via M&A, most recently landing at the wealthtech supermarket InvestCloud.

Conquest recently raised $7.5 million on top of $3 million a year ago to expand U.S. operations.

Another well-capitalized Canadian venture heading south is FutureVault, a secure digital vault and document exchange platform targeting the U.S. with its powerful document management capabilities, automated workflows and collaboration tools. Meanwhile, ReachStack, a Canadian, AI-powered email communication, content sharing and revenue nurturing platform also recently set its sights on the U.S. financial advisor marketplace. 

Advisor Websites is another Canadian fintech success story that has grown dramatically in the U.S. by focusing on a single core piece of the advisor tech stack, websites, by making them flexible and dynamic — so much so that Advisor Websites was recently acquired by the fast-growing marketing platform Snappy Kraken.

Moving South

Canadians making it big in the United States is not a new phenomenon, of course. Just consider this short list of celebrities who have successfully made the leap — actors Pamela Anderson, Ryan Gosling, Ryan Reynolds, John Candy, William Shatner, Michael J. Fox and dozens of others —  all the way to famous musicians such as Justin Bieber, Rush, Neil Young, Alanis Morissette and The Weeknd.

So it should come as no surprise that there would be a plethora of fintech talent, entrepreneurs and deal-makers who originated in Canada and who now have ambitions to expand beyond their local markets.

To learn more about this emerging trend, I sat down with the well-liked and admired fintech pioneer Dave Ireland, a longtime senior executive with Salentica, a leading Canadian-based CRM platform used by the U.S. wealth industry’s most successful RIAs.

Salentica launched in the late 1990s, entered the U.S. market shortly thereafter, found success, and was ultimately acquired by SS&C, the owners of the popular Black Diamond Wealth Platform and Advent Software wealthtech systems used by thousands of advisors every day.

According to Ireland, Canada is set up to produce lots of great tech talent: “It starts with a diverse talent pool supported by federal policies aimed to attract immigrants with tech skills, and funnels them into an excellent post-secondary education/feeder system. The brightest and most creative will find support from a few dozen incubators here in Toronto and across the country — so there is no shortage of supply.” 

On the other hand, due to Canada’s concentrated financial services industry — now dominated by a handful of Toronto-based megabanks — there’s been limited innovation, which has resulted in technology resources looking elsewhere to grow. 

“Inevitably, as these Canadian entrepreneurs and startup firms start to explore the market here at home, they quickly discover an oligopolistic financial system regulated by the federal government and controlled by literally a handful of massive banks,” Ireland explained. “These banks are the gatekeepers to the financial products available, and frankly, they have little to no incentive to invest in startups who are trying to provide innovative products to the marketplace.”

As a result, this disenfranchised talent looks elsewhere to flourish and immediately turns their eyes south, where they see a diverse market in which the only large, entrenched financial institutions in the independent space are the big custodians.

But these custodians, which include TD Ameritrade and its innovative Veo “app store,” are actually incentivized through competition to provide choice and open architecture. (Of course, the industry will have to wait and see if anything changes to this open architecture movement now that Schwab has acquired TDA.)

According to Ireland, “the advisor fintech ecosystem in the U.S. is very different in that there genuinely is a sense that the more competition there is, the better the products become. What’s more, in the U.S. even the fintech competitors get along, and there’s a sense of community among the vendors, which actually seems like it should be a Canadian thing, right?” he said with a wry smile. 

As for Salentica, Ireland says the company realized early on that it couldn’t grow by staying local and needed to get a foothold in the U.S. independent advisor technology ecosystem to get to the next level.

“We knew that what we did translated to any wealth advisor, so we started targeting firms in the U.S.,” he explained. “We were fortunate to have found some excellent and supportive early clients who saw us as partners rather than vendors, and helped us make our products better. Once we committed to building for RIAs and family offices, things changed quickly.” 

Thus, for advisors who start to get calls from phone numbers with a “416” area code, be sure to answer. The person on the line may offer you the very cutting-edge technology solution you’ve been looking for.

Timothy D. Welsh, a certified financial planner,  is president, CEO and founder of Nexus Strategy LLC, a leading consulting firm to the wealth management industry. He can be reached at [email protected] or on Twitter @NexusStrategy.


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