Canadian robo-advisers and online discount brokerages walked away unscathed after Monday's market mayhem, unlike many of their U.S. counterparts who saw clients frustrated after being locked out of their trading accounts.
As markets started to dive, Canada's largest robo-adviser, Wealthsimple Financial Inc., took to social media to tweet out client reminders that there is no need to panic over day-to-day market activity. With more than $1-billion in assets under management, the online portfolio manager also sent out e-mail alerts asking clients to "drown out the noise." Despite some phone calls about the market activity, the provider saw no sudden spike in user volume on the website.
Robo-adviser Nest Wealth Asset Management had a similar approach. Using data analytics, the online site can determine what type of investor each of its client is. If a client tends to log in more during market movement, they could be flagged as a nervous or concerned investor. The data allow the online manager to narrow down which clients may need additional reassurance and a direct e-mail message.
"As a company that tells our clients to ignore the daily noise of the market, it would be reckless to contribute to that noise by blasting out bulk e-mails [to our entire client base]," Nest Wealth chief executive Randy Cass said.
In the United States, two of the largest robo-advisers – Wealthfront Inc. and Betterment – experienced website outages as the S&P 500 index sank. At the same time, online brokerage sites for TD Ameritrade, T. Rowe Price, Vanguard Group and Charles Schwab Corp. all reported outages as clients attempted to access accounts.
Several of Canada's discount brokerages experienced similar outages in early January when investors rushed to open online trading accounts to access the thriving marijuana sector. The sporadic delays frustrated the do-it-yourself investor community, with many posting online comments about missed opportunities and being locked out of accounts. The question as to whether a similar outage would be a repeat event during a market correction appears to be answered after Monday's action resulted in minimal disruptions.
TD Direct Investing – which continues to see delays in its online account-opening process since January's outage – did not experience any major issues on Monday. RBC Direct Investing, another online platform that was affected in the January outage, had "some intermittent issues [on Monday] that were quickly resolved," a RBC spokesperson said.