I don't think that's the reason. Investors are lazy and don't like to download hundreds of wallets. For them, one wallet that supports hundreds of cryptocurrencies is better than 10 secure wallets, and these are the majority who might download Tether.wallet.
Who said anything about downloading hundreds of wallets?
Most people have two or three.
They would hate having to write down a stack of seed phrases that would end up being as tall as a paperweight.
How do you even store all that?