Huge growth predicted for robo advice in Canada

The pace of change looks set to accelerate as BMO enters the market space

Huge growth predicted for robo advice in Canada
The robo advice sector has been developing at a rapid pace in Canada – and it shows no signs of slowing down, according to a new report.

A report by Celent entitled Thawing Market: The Growth of Robo Advice in Canada outlines how automated investment advice has grown quickly since debuting with the likes of Nest Wealth and WealthSimple back in 2014. Now it looks at how robo advice is disrupting the previously bank-dominated wealth management business across the country.

It outlines how wealth management incumbents and banks were generally sceptical to the robo advice concept initially but now are waking up to its potential threat with online advisors able to generally offer lower costs as well as fee transparency. It describes the entrance of BMO into the sector as the latest response to this incursion – one that will place pressure on start-ups to expand their offers.

It suggests that others will follow BMO in entering the business with robo advice proving an attractive proposition for asset managers, banks and insurers. It suggests there are significant opportunities if the incumbents are able to overcome obstacles such as how the advice should be delivered.

Speaking about the development of the sector, William Trout, senior analyst and author of the report, commented that the dominance of banks in this area is no longer guaranteed.

“Canadian investors are tired of overpaying for investment advice, and robo advice speaks to the digital zeitgeist,” he said. “The question is not whether a wealth management market frozen in time will thaw, but how quickly.”
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