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Nest Wealth has not publicly disclosed its assets under management, but CEO Randy Cass says it manages about 'half a billion in assets' for retail clients and has more than 20 partnerships with wealth-management companies in Canada.

Sami Siva/The Globe and Mail

Insurance adviser Hub Financial Inc. has partnered with robo-adviser Nest Wealth to broaden its investment portfolio capabilities, including adding access to low-cost exchange traded funds for Hub clients.

With 5,000 insurance advisers, Hub is Canada’s largest managing general agency (MGA) – a specialized insurance broker that acts as an intermediary between independent insurance advisers and insurance carriers.

On Monday, after a two-year search for an online partner, Hub signed a referral arrangement with digital wealth manager Nest Wealth that will allow Hub insurance advisers to outsource investment management and gain access to exchange traded funds. ETFs are a low-cost investment product that life-insurance advisers at Hub have not been able to sell directly to clients as they are not licensed to sell securities such as ETFs.

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Robo-advisers – also known as online portfolio managers or digital advisers – have been gaining traction in the Canadian financial landscape. The total number of providers has jumped from only a handful in 2012 to more than 15 registered platforms today. Over the years, several robo-advisers have launched business-to-business platforms, allowing independent financial advisers to access their portfolio-management tools for a discounted price – including advisers who are not licensed to sell ETFs.

However, not all robo-advisers are finding success in the direct-to-business arena. Wealthsimple Inc., the country’s largest online wealth manager with more than $6-billion in assets under management, recently announced it is in the process of selling its separate B2B offering – Wealthsimple for Advisors – in order to focus on its online services for direct consumers.

Nest Wealth has not publicly disclosed its assets under management, but CEO Randy Cass says it manages about “half a billion in assets” for retail clients and has more than 20 partnerships with wealth-management companies in Canada.

While still only a fraction of the larger asset-management market in Canada, robo-advisers are offering alternative investment advice to digital-savvy customers. The web-based platforms offer clients an online risk-assessment tool that calculates an appropriate asset allocation based on age, financial goals and risk tolerance.

Now, through referrals, Hub clients will be able to set up an investment portfolio of ETFs while still maintaining a relationship with their Hub financial adviser.

“This referral arrangement will allow advisers to spend more time building stronger client relationships, focus on true holistic financial planning and ensure our clients are better positioned to achieve their financial goals,” said Aly Damji, executive vice-president at Hub.

Josh Book, CEO and founder of Parameter Insights Inc., a market research and consultancy firm, said the partnership is a testament that investment managers need to modernize their services.

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Financial advisers now hold “more value” in spending time helping clients across a range of financial choices, he says, rather than just focusing on managing clients’ physical investment assets.

“Financial planning is increasingly being viewed as the key service offering that helps advisers play a more prominent financial quarterback role with their clients,” Mr. Book says.

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