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Assante Wealth Management Ltd. is joining the robo-advisory revolution in an effort to tap into a younger generation who are cost-conscious and may not require the full services of a financial adviser.
The launch of a computerized wealth-management platform is intended to complement – not compete with – Assante's existing business model that employs about 750 advisers across Canada.
"We recognize that part of our client base may not need sophisticated value or complex financial planning, so we want to build a scalable model to be able to provide those clients with the level of service that they require," said Steven Donald, president of Assante. "We believe in the value that financial advice provides to Canadians longer term."
Assante, which is owned by CI Financial Corp., is a major player in the independent wealth-management space with about $32-billion in assets under administration. It becomes the second major Canadian financial firm to dip its toes into the robo-adviser space this year. Power Financial Corp. last week announced it was investing $30-million into Wealthsimple Inc., a robo-adviser that has 1,000 clients on its platform. It has yet to say if Wealthsimple will be integrated with its existing subsidiaries, which include IGM Financial Inc. and Great-West Lifeco Inc.
Robo-advisers are growing in popularity with many investors looking for lower-cost investing options. These online portfolio managers recommend investment portfolios by using an asset-allocation tool based on age, financial goals and risk tolerance. Clients receive automatic rebalancing on their investment portfolios as well as an online portfolio manager they can access via phone, e-mail, text message and video conferencing.
Assante is looking to incorporate the robo-adviser offering as a tool to help financial advisers segment their client base. The firm is currently in the process of building a proprietary platform that will allow clients, who may not need complex financial planning services, the option of an online investment manager.
The investor will remain a client of an Assante financial adviser, who will periodically contact the investor to ensure his or her needs are being met, Mr. Donald said. While the fee structure has yet to be determined, the level of service would provide a lower-cost option for investors. Once a client's financial needs start to increase, they will be able to move into a more enhanced relationship with the adviser.
"I think this makes a lot of sense from a distribution viewpoint," said Gary Ho, research analyst with Desjardins Securities Inc. "It builds a relationship with the younger generation who are looking to save and might not need the full-blown services of a financial adviser."
Unlike traditional robo-advisers, which predominately use exchange-traded funds in their portfolios, Assante's robo-adviser offering will consist entirely of mutual funds. This could mean higher-than-normal robo-advisory fees, which typically charge from 0.25 per cent to 0.60 per cent depending on the size of an investment account.
In Canada, Nest Wealth Asset Management Inc. and Wealthsimple have both been working on launching "adviser only" robo-adviser platforms. Both platforms are still being tested but will offer financial advisers a discounted rate for using the investment management tool, while advisers continue to maintain a relationship with clients. In the U.S., several wealth management firms – including Charles Schwab, Fidelity Investments and TD Ameritrade – have either partnered with a robo-adviser, or built an internal robo-adviser offering.
Clare O’Hara