Brendan Wood, left, and Brendan Lee Young at work on their product for passive investors.

Brendan Wood, left, and Brendan Lee Young at work on their product for passive investors.

At this very moment, some $16 million in Canadian retirement accounts are being managed with the aid of a new investment tool managed by a young Fredericton company.

The company is Passiv. It’s the brainchild of Brendan Lee Young and Brendan Wood, two passive investors who wanted a better, more cost-effective tool to make sure their investment accounts were always properly balanced.

They built the tool and worked with regulators to make sure it violated no securities laws. Now there are more than 370 Canadians, who together have about $16 million in funds, testing it. The two Brendans are now planning a full commercial launch in late February or early March.

“Our product, Passiv, allows a do-it-yourself investor to turn their brokerage account into a personalized robo-adviser,” said Young in an interview on Monday. “We both manage our own retirement savings accounts because we don’t want to pay fees. But even if you are a passive investor, it still takes some time. We were spending more time than we wanted to.”

Passive investing is the practice of investing money in low-cost assets like ETFs and holding them for a long period of time, so that transaction fees and other costs don’t eat into your ultimate returns. The problem is that different assets appreciate (or depreciate) at different rates. So, to maintain your portfolio at the proper balance between stocks, bonds and other assets, you have to keep monitoring and tinkering with your portfolio. It takes time.

The Black Arcs Develops a Digital Tool for Land Use

Some brokerages offer “robo-adviser” services, which will do this automatically, but they cost money. What Passiv does is help passive investors to rebalance their portfolio cheaply and easily. It notifies users when cash comes into their account and when their portfolio drifts out of alignment with their target. 

Young had the idea for the product last April and teamed up with his friend Wood, and they soon produced a basic product that could aid passive investors. To make sure that the product adhered to all rules, they ran their project by New Brunswick’s Financial and Consumer Services Commission, the province’s securities regulator. FCSC worked with the founders to make sure it conformed with regulations, even contacting other provincial commissions to make sure Passiv was all right.

With a green light from regulators, Young posted an article in Reddit explaining the product, which received about 5,000 views and led to 370 passive investors signing up for the beta test. The company has also secured a partnership with Questrade, the fastest-growing online brokerage in Canada.

Young admits that the $16 million held by the beta-testers is peanuts in comparison to the broad market, but working with them has given Passiv valuable insights into what the market wants from their product. Some testers have suggested they would pay for the product if it had a few more features. The team is now working on new features, such as one-click trading, and will have to again check with regulators to make sure new features meet the rules.

Passiv was a member of the recent Launch cohort offered by Propel ICT, and is now working on adding new features and striking more relationships with brokerages.