Investment giant CI Financial is stepping into the digital-advice business after acquiring a majority stake in robo-adviser Wealthbar Financial Services Inc.
The two firms announced the agreement on Friday morning but did not disclose financial terms of the deal, which is expected to close in January, 2019.
Vancouver-based Wealthbar, which first launched in 2014 and offers online portfolio management to investors, will continue to operate as a stand-alone business. Its co-founders, Tea and Chris Nicola, as well as Neville Joanes, chief investment officer and chief compliance officer, will stay in their positions and retain an ownership interest in the firm. There will be no changes to the firm’s account fees or portfolio holdings, which include $275-million in assets under management.
CI Financial is among Canada’s largest independent asset managers with approximately $172-billion in assets under management and administration. The firm operates a number of major players in the money-management space, including Assante Wealth Management Ltd., CI Private Counsel LP and ETF provider First Asset Investment Management Inc.
Assante Wealth Management first began looking at building an internal robo-adviser platform for its team of financial advisers to use in 2014 – the same year Wealthbar entered the industry – but never formally launched one. In 2017, CI began to accelerate its plans in digital technology after acquiring BBS Securities Inc., a financial-technology company that also operates online discount brokerage Virtual Brokers.
Robo-adviser platforms offer clients an online risk-assessment tool that quickly calculates an appropriate asset allocation based on age, financial goals and risk tolerance, and provides clients with a recommended investment portfolio predominately made up of low-cost exchange-traded funds.
“This relationship certainly accelerates our plans in the digital-advice arena dramatically,” said Steven Donald, executive vice-president at CI Financial. “CI is really looking to enhance the digital experience for both financial advisers and clients across our entire platform, and Wealthbar’s model is applicable across the board.”
The deal comes at a time when Canadian banks are beginning to pay closer attention to robo-advisers, also known as online portfolio managers. Royal Bank of Canada launched its platform, RBC InvestEase, last month and several others have announced plans to enter the space. As well, Canada’s largest robo-adviser by assets, Wealthsimple, recently surpassed the $3-billion mark as investors continue to look beyond traditional methods of investing. Wealthsimple is owned by Power Financial, which was Canada’s first major financial firm to back a robo-adviser service with an initial $10-million investment in 2015. Today, Power Financial and its subsidiaries own an 81.6-per-cent interest in Wealthsimple.
“There is no doubt that consumers are increasingly exploring alternatives to traditional asset management,” said Josh Book, chief executive and founder of ParameterInsights Inc., a financial-services research and consulting firm. “Financial advisers are actively seeking ways to adapt to the changing needs and desires of consumers. Many firms are already engaged in the battle to control the adviser desktop. The result is a rapidly shifting landscape in which wealth-management products and services are being delivered to a variety of consumers in a variety of ways.”
“CI Financial’s strength, independence and outlook on digital innovation were important reasons for our decision to choose them as partners,” Wealthbar’s Ms. Nicola said in an interview. “CI Financial’s backing and resources will put us on a new growth trajectory as we build on our success in technology, client experience and products."
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Clare O’Hara