Robo-advisors head for the exits

Robo-advisors head for the exits

Robo-advisors head for the exits

The head of one of Canada’s first robo-advisors is reacting to speculation that the $30m Wealthsimple deal marks the beginning of the end for independent players like his.

WP spoke to Chris Nicola, CEO of Vancouver-based WealthBar about the implications of the Power Financial investment; Nicola’s observations varied from surprised to excited to unfazed. 

“The main thing that was so surprising to us [WealthBar] was that it happened so soon,” said Nicola. “We’ve seen with the way LearnVest went [bought by Northwestern Life in March for more than $250 million] that the largest industry players are interested in having some ownership in these new technology platforms…It just depends on what their long-term plans are.”

Charles Schwab announced at the end of March that its robo-advisor offering in the U.S. pulled in $500 million in assets in the first three weeks that it was available to retail clients. 

Matthew Fronczke, director of product consulting at Kasina, a consulting firm working exclusively with asset managers and insurers, told the Investment News recently that these numbers are impressive by anyone’s benchmark.

The big boys are taking the onslaught of online advice seriously, whether we’re talking automated or one-on-one human interaction. Offering “Intelligent Portfolios” to customers, Schwab’s been able to attract a whole bunch of interest from advisors.

“The responses we are receiving from advisors indicates significant interest on their part,” Schwab representative Alison Wertheim told the Investment News March 30. 

However, just because there have been a number of transactions in the robo-advisor space in recent months, that doesn’t necessarily mean we’re witnessing the beginning of the end for independent robo-advisors.

“I think it’s too early for us to speculate too much on how this will change things,” said Nicola on the immediate future. “I think probably there won’t be any big changes right away. It sounds like Wealthsimple will continue to operate as they were.”