Toronto advisors facing 'Robo-advisors' challenge

So-called robo-advisors have put the fear of God in U.S. advisors, but Canadians say they're far from afraid.

Advisors are letting new online ‘robo-advisor’ tools, like Standard Life’s Motion Profiler, roll off their backs, arguing that the one-on-one advice and a two-way conversation will always override the latest tech gimmick.

The Motion Profiler – released Tuesday by Standard Life Assurance Company of Canada – is an online questionnaire that provides a snapshot into an investor's financial outlook – including economic confidence, job security, investment concerns and preferences. A score out of 100 and a designation into one of five profiles – concerned investor, cautious analyzer, contented passive, confident accumulator and sophisticated investor – are assigned and emailed to clients and/or their advisor.

“They (online tools) have their usefulness. What I disagree with is if that’s the only thing you are using to help decide the client criteria,” says Marc Lamontagne of Ryan Lamontagne Inc. “You still can’t beat the sit down and talk with the client.”

Caroline Paton, a Toronto-based, fee-only financial planner and money coach, agrees, adding that online tools are limiting when creating in-depth financial plans.

"You can use a tool to forecast how much you might need for retirement, but full financial planning is a lot more than projection. It cannot be easily replaced through a technology tool," explains Paton. "It’s a conversation you have to have to change their (clients) beliefs about money.” (continued.)


New financial-advice models, like Motion Profiler, are connecting tech-savvy investors with a suite of analytic tools capable of creating financial plans and investment portfolios. These include pure technology-driven websites for do-it-yourself investors (i.e. Motif Investing, Jemstep). They also run to online advisor-investor communication only (i.e. Personal Capital, Learnvest) and financial service companies that have expanded their online services (i.e. Vanguard, Edelman Online).

These growing online offerings have American advisors worried about a significant decrease in retail investor demand for their services, with the potential to hollow out the middle section of the market. .

Still, Canadian advisors believe a robot will never replace the intimate, face-to-face interaction clients get from a trained professional.

“It’s about talking to people about how they feel,” explains Ed Rempel, financial planner with Ed Rempel & Associates/Armstrong & Quaile Associates, Inc. “A big side of the relationship you get from a planner you can’t get from a 'robot.'”

He's not alone, with other professionals sharing the same confidence with WP.

“The majority of my clients, I know them very personally,” adds Rhonda Sherwood, a Vancouver-based financial advisor with ScotiaMcLeod. “So many have gone through really interesting life situations and because I know them personally, I can advise them (on issues) specific to them.” (continued.)


These advancements won’t come without some sort of industry shake-up, changing the way advisors interact with their clients, just as social media has. This rejigging includes changing fee structures as technological services offer cheaper rates, and increasing transparency as robo-advisor models offer fixed and basis-point fees.

And, what about luring the younger generation? With the youth of today plugged in literally all the time and expecting results "now," how will advisors keep up with this 24/7 demand? Communicating with clients via text, web conferencing; while working on documents in tandem and providing comparative data on peer investments will become the norm.

“The younger generation tends to trust the Internet and computers quite a bit. More than is warranted,” says Rempel. “They often start that way and then realize as they build money and their situation becomes more complex … maybe I should be getting more advice on this?”

One way to ward off the robo-advisor invasion is to face any fears head on. Keep on top of what you can, embrace new technology and make adjustments accordingly.

“On the marketing side, I think social media is changing the landscape,” admits Paton. “(Advisors) need to be blogging and tweeting; reaching out the people and giving them free information to attract them to you.”