The Next Fintech Movement Coming to America

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 US.,” 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.” 

So, for advisors who start to 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.