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RBC to launch robo-adviser business, will use its own ETFs

Royal Bank of Canada is the second major bank to offer its own robo-adviser.

Fred Lum/The Globe and Mail

Royal Bank of Canada is set to launch its own robo-advisory service that will house its own proprietary exchange-traded funds.

RBC confirmed to The Globe and Mail it is now offering a new, automated online portfolio platform for a select group of employees to pilot test.

The platform, RBC InvestEase, is a new and separate business for Canada's largest bank. The platform will offer automated investment advice and discretionary portfolio management, delivered through a digital platform and supported by accredited portfolio advisers.

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"RBC knows that a growing number of Canadians are looking for a digital investing solution, with easy access to portfolio recommendations and professional advice," said Rosalyn Kent, president and chief executive of RBC InvestEase in an e-mail to The Globe. "The service is designed to meet the needs of investors who prioritize a digital experience in how they access advice and invest."

The online platform launched on Wednesday for a pilot-test phase to a small group of Ontario-based RBC employees and includes half a dozen portfolios comprised of index ETFs developed by RBC Global Asset Management.

A wider launch date for the general public has not been set by the bank.

Robo-advisers – also referred to as online portfolio managers or digital advisers – are seeing new businesses entering the Canadian marketplace at a much quicker pace in recent years, as the number of providers is now at 15. That is up from less than a handful in 2013.

RBC's entrance makes it the second Canadian bank to build an in-house online portfolio-management platform. Bank of Montreal was the first to enter the robo-adviser market in 2016, with the launch of SmartFolio. BMO also launched its online platform with portfolios comprised of only the bank's proprietary ETFs.

The majority of the independent online portfolio managers in Canada include a mix of ETF products from various providers.

Many of the other big banks are also starting to be more mindful of the robo-adviser space in Canada.

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In April, National Bank of Canada invested $6-million into robo-adviser Nest Wealth and brought the digital platform in-house with its investment advisers and clients while, earlier this month, The Globe reported Canada's largest robo-adviser, Wealthsimple, which has more than $1-billion in assets under management, is in talks with Canadian Imperial Bank of Commerce for a possible partnership.

Wealthsimple declined to comment on a possible partnership with CIBC, but noted that its online platform has seen interest from bank employees, with more than 1,200 employees from all six Canadian banks opening online accounts.

"We believe that digital advice is going to play a major role for every institution going forward," Wealthsimple CEO Michael Katchen said.

"When we see the banks in Canada moving in that direction, it validates what we have been doing, it validates the change that we have brought to the industry and it accelerates the vision that we have of a financial-services industry that puts their clients first and does right by their clients."

In addition to the banks, several financial-services firms have set up partnerships with robo-advisers. Michael Lee Chin's Mandeville Private Client Inc. partnered with Smart Money Capital Management Inc. to launch a new online portfolio-management platform called WealthPort, while robo-adviser WealthBar teamed up with PPI Financial Group to offer clients an insurance offering.

"Ever since we [first launched] in Canada, we always believed that it would only be a matter of time before every bank had a comparable offering," WealthBar co-founder and CEO Tea Nicola said. "Some may build it themselves and others will work with a company like ours to provide a software solution for them. It is great to see one of the largest Canadian incumbents validate the online customer-service model."

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Robo-adviser platforms offer clients an online risk-assessment tool which quickly calculates an appropriate asset allocation based on age, financial goals and risk tolerance. The results provide clients with a recommended investment portfolio predominantly made up of exchange-traded funds – all for lower fees than those usually offered by traditional financial advisers.

RBC is the country's fifth-largest ETF provider with more than $3.5-billion in assets under management as of Oct. 31. The company launched seven ETFs last month, bringing its product shelf up to a total of 35 funds.

Details on specific fees and the investment portfolios for RBC InvestEase have not yet been released by RBC.

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About the Author
Globe Investor Reporter

Clare O’Hara is a reporter at The Globe and Mail. Prior to that, Clare spent eight years as a staff writer at Investment Executive, a national newspaper for financial service industry professionals. More

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