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CIBC on IGM Financial's Wealthsimple and IG Wealth Outlook

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The 71% jump in Wealthsimple's assets under administration (AUA) to $125 billion in the fiscal first quarter has "clearly" been a factor in IGM Financial's (IGM.TO) share price performance over the last year, notes CIBC Capital Markets.

Analyst Scott Fletcher, who accompanied IGM Financial management, including chief financial officer Keith Potter, for two days of West Coast marketing meetings last week, said the success of Wealthsimple's automated wealth management services "naturally" leads to questions about the future of advisor-led wealth management and how IG Wealth will compete going forward.

However, the company sees more than enough room in the $8 trillion Canadian discretionary wealth management market for both models to succeed, and expects that, over the longer term, similarities in the business models will emerge, he notes.

"With Wealthsimple adding dedicated financial advisors and IG Wealth deepening its investments in technology, partnering with fintechs to broaden the product suite, and leveraging AI to improve advisor effectiveness, those similarities have already started to show up," Fletcher writes.

IGM has a neutral rating and $79.00 price target at CIBC.

Price: $78.56, Change: $+1.12, Percent Change: +1.45%

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