But while some sophisticated clients will go online, find a model portfolio on, say, Canadian Couch Potato, and use that to invest, “For others we find that the advisor is still important. There is a segment that need and want advisors…they aren’t as sure about what to do," says Nicola. "There is always going to be a need for real advisors." But even for those, the future is digital. "There is still a lot of paper being shipped around," says Nicola. "But we can let clients know automatically about things like RRSP deadlines, rebalancing….the process becomes easier. There are less mistakes. Taxes are easier to do. There are less missed opportunities." That is, with less paper to get lost of shuffled, automated processes mean fewer mistakes, contributions get made on time. The ultimate result, bigger portfolios. "As rules like CRM2 come in, it's going to be harder for firms that aren’t set up this way to compete," he says.
In fact, future competitive advantage in the industry will be with those that are most competent in terms of tech. Can the firm keep data safe? Can it get a system up and operating? Who can maintain technological standards? "If you can believe it, the industry doesn’t have standards on digital protection yet," he says. No wonder he feels like he's way out in front of the industry. He feels he's got a niche because traditional Canadian firms have been slow to adapt to the tech opportunities he is adopting. “The industry needs to modernize. People want advice, but they want it at lower cost. Over time the years as the top advisors moved upmarket to the fee-based world. But there was less advice given to the client. Look, I know there are lots of good people giving advice today [through the embedded compensation model]. But some institutions began giving less and less advice….Eventually, people were paying full commission on mutual funds at the banks, but getting no advice whatsoever, and people didn’t know that."
To Nicola’s mind, this drift and complacency has left those older institutions and aged models exposed to a wave of tech-enabled disintermediation about to roll through the industry. Consider his take on fees.