There has been a spate of interest recently around so-called “robo-advisory” firms. At least a half-dozen such firms have popped up over the last couple of years. In the U.S. companies like WealthFront and Betterment have packed on billions in AUM in recent quarters. As the trend gets set to hit Canada, advisors would be wise to understand where the tech is taking us.
Earlier this week WP reported on a new firm in Canada, WealthBar, that is getting set to offer so-called "robo-advisory" service from Vancouver. WP talked to the company’s founder, Chris Nicola, who provided a few more of the details on what's to come.
Nicola was working in IT for his family’s firm, Nicola Wealth, when he began thinking about the intersection of technology and wealth management. “We started talking in the early 2000s about things we could do to bring their business into the digital era,” says Nicola in an interview. He realized he was sitting on a new business niche. “I started to find more colleagues were asking about what to do for saving for retirement. I started to realize there was something here,” says Nicola.
He did some research; found that that Betterment and Wealthfront were working on this. But Nicola also realized the business models of these wholly-techn focused firms were not enough. “For us, it’s always been about building a full-service offering,” says Nicola. That is, the new firm will evolve beyond the first generation of robo-advisory firms and will add real humans to the mix.
So far, the early robo-advisory firms have been radically tech-based—they use algorithms to slot clients into pre-determined portfolios with no human assistance—Wealth Bar represents an evolution of sorts. The company will offer access to real advisors. There will be the tech-enabled side of the firm that gets clients into portfolios and generates financial plans with tech. But access to real advisors will also be part of the mix. A former Sun Life advisor is on staff. The company will be a licensed life agency. There will be real advice from a human on RESPs, RRSPs and taxes. That is, the company is merging the new digital possibilities with traditional advisor services. The result is an entirely new type of advisor firm.
“What we’ve found, is that people are looking for convenience. They don’t have time, or want, to go into a bank. They always find a way to put that off," says Nicola. That is, over the last fifteen years people have gotten used to doing things from their laptop. What they don’t want to do is make an appointment, drive to an advisors office and sit there for an hour. “Lots of people we talk to, they say, ‘I want to do it this way.’ This is what we’ve found,” he says.