Meet Josh Miszk, robo-advisor. Mr. Miszk is 33, with a wife and baby. He grew up in St. Catharines, Ont., and worked at his family's restaurant in nearby Chippawa when he was young. He is, in a word, human, and he's amply qualified to give investment advice.
"Most people don't understand that there are financial professionals [at robo-advisories] who are managing the portfolios and providing advice," Mr. Miszk said in an interview.
He is vice-president of investments for Oakville, Ont.-based Invisor Investment Management Inc., an online portfolio manager or robo-advisor known as Invisor.ca. Mr. Miszk holds the esteemed chartered financial analyst (CFA) designation, which qualifies him to manage people's money and make investment decisions on their behalf.
"The main difference between us and a typical portfolio management firm is that we use technology to reach more people," Mr. Miszk says. "That way, we don't have to focus on just ultra-high-net-worth individuals. We can provide quality advice and quality investment management to anyone via a smarter interface."
Mr. Miszk met Invisor co-founder Pramod Udiaver, also a CFA charter holder, when they worked together at TD Asset Management Inc., the investment management arm of TD Canada Trust. Mr. Udiaver, who is chief executive officer, co-founded the firm two years ago with Dan Poole, chief operating officer and a chartered life underwriter, or CLU.
Mr. Miszk started his career at TD Canada Trust, where he sold mutual funds and arranged mortgage financing. Eventually, he moved to TD Asset Management, where he worked in operations, then moved to trading fixed-income securities. "It was a great job, really interesting," he recalls. Next, he moved to portfolio implementation, where he monitored big accounts and rebalanced their holdings.
When he heard Mr. Udiaver was leaving TD to start a new venture, Mr. Miszk invited him out for a beer to see what he was up to. He liked the idea of creating something brand new, he recalls. So he asked Mr. Udiaver to keep him in the loop. A few months later, he became Invisor's fourth employee.
"I've always liked smaller operations, but I never thought I'd be working for a tech firm."
He is pleased to be offering unbiased advice to smaller investors. Before robo-advisers "if you had $100,000, what were your options to get advice?" he asks.
With the unrolling of fee and performance reporting for 2016 under the new securities rules known as CRM2 (Client Relationship Model Phase 2), investors are becoming painfully aware of how much they have been paying. The average mutual fund is charging 2.3 to 2.5 per cent a year. The average cost for an Invisor portfolio of exchange-traded funds is 0.7 per cent.
"When you see the amount people are paying, we have the ability to get them a solution at a much lower cost," he says. "I know how much costs matter. I learned that in trading. You don't see it as a regular investor. With trading, every fraction of a penny matters; you see how easy it is to lose money," he adds. "That really opened my eyes."
Invisor is a small fish in the Canadian robo-advisor pond, where industry leaders Wealthsimple Financial Inc. and Nest Wealth Asset Management Inc. have grown their assets under management by forming alliances with big financial institutions.
While robo-advisers are competing fiercely for a foothold, they're no flash in the pan. Last month, the CFA Institute announced it was upgrading its curriculum to include more fintech, with artificial intelligence, big data and robo-advisories to become part of the CFA exams starting in 2019.
"If you're not aware of those things coming out of the program, you're behind the eight-ball already," Mr. Miszk says.
Invisor aims to set itself apart by offering portfolios based on investors' goals, such as retirement, children's education, a big purchase, or growth. The firm has no minimum investment, and it charges a fee of 0.50 per cent for portfolios of up to $250,000, declining thereafter. In addition, there is the cost of the ETFs, which averages 0.20 per cent.
Mr. Miszk and Mr. Udiaver design custom portfolios for clients using ETFs and some F-series mutual funds. "The funds are mostly passive, but some are active, some are more tactical. We might use a low-volatility fund or one that focuses on a specific industry," Mr. Miszk says. The goal is to create a portfolio that meets the clients' needs. Once the portfolio has been created, there's the ongoing business of rebalancing it and reinvesting the proceeds.
Clients can choose from portfolios designed by Invisor, BlackRock Asset Management Canada (iShares) or Vanguard Investments Canada Inc.
Looking ahead, Invisor sees its future in forming partnerships with investment advisors and their firms, through licensing arrangements, and mutual fund sales representatives who refer clients wanting discretionary money management.
"Initially, the plan was to start off with B-to-C (business-to-consumer)," Mr. Miszk says. "We started off advertising online, but it's tough to get through all the noise out there," he adds. "It has since become apparent that the B-to-B (business-to-business) model is what is going to make sense for us."
So how does he like working for a startup?
"It's great," Mr. Miszk says. Working for a big bank is a "much more comfortable lifestyle," he acknowledges. "In a big firm people are looking to do business with you left, right and centre. Here you have to fight for it."
He reflects for a moment. "You learn a lot about yourself in a small business like this," he says. "I find that end of it awesome." In a big company, you develop specialized skills and depend on the support system around you for the ones you don't have, he says. "In a small business, you have to rely on your own judgment and effort in areas that you aren't as comfortable with. You're quickly forced to learn new skills."
As well, "a new business is constantly changing under your feet. The foundation ... is still being designed and built, then changed, and built again, then changed again," he says. "It's a perpetual cycle and I've learned to be comfortable being kept off balance. In this type of environment, you really have to be flexible."