Robo-adviser Wealthsimple is broadening its online offering for financial advisers in hopes of building stronger partnerships within Canada’s investment community.
Last week, the online portfolio manager – which investment giant Power Financial and its subsidiaries have more than 81 per cent combined ownership in – appointed prominent wealth-management executive Jean-François Courville as chief executive officer of Wealthsimple for Advisors, the company’s business-to-business platform designed specifically for financial advisers looking to offset some investment-management tasks.
Mr. Courville is the first dedicated executive appointed to the platform by the company, which was first launched in May, 2016, and has approximately 300 independent financial advisers using the platform.
Currently, Wealthsimple has more than $2-billion in assets under administration, including those assets from Wealthsimple for Advisors. Now, while the platform will continue to service individual financial advisers, the appointment of Mr. Courville is a move toward boosting its B2B platform by partnering directly with investment firms – particularly mutual-fund dealers who currently are unable to directly access exchange-traded funds (ETFs) for their clients.
The investment community is one that Mr. Courville knows well as the former executive vice-president and chief operating officer of RBC Wealth Management and former president and CEO at Manulife Asset Management.
Mr. Courville officially began his role with Wealthsimple on May 22 but has spent the past several months in-house exploring this new area of the business and is already looking into whether Wealthsimple should obtain its own Mutual Fund Dealers Association (MFDA) licence and become a registered MFDA dealer.
“The next five to 10 years are going to yield more change in the financial-services industry than we have seen in our entire careers,“ Mr. Courville says. “Technology is going to level the playing field and everybody has to pay attention. It’s not about robo-advisers, it’s about the digitization of all financial services, which will greatly change how advice is delivered to clients.”
Having an MFDA licence would allow Wealthsimple to offer a replacement to the current operational infrastructure of a dealer – which could include a number of third-party providers and systems, Mr. Courville says. As an MFDA dealer, Wealthsimple would be able to provide firms with carrying dealer capabilities – which could include the entire operational front- and back-end mutual and ETF-trading infrastructure.
Once seen as a major disrupter to financial advisers, many Canadian robo-advisers have recently been partnering with the wealth-management industry to combine services that will help build scale at a quicker pace while providing technology platforms to advisers and their clients.
The next five to 10 years are going to yield more change in the financial-services industry than we have seen in our entire careers— Jean-François Courville
“For the wealth-management industry, the next five years will bring rapid development of new, modernizing capabilities of existing business processes through digital technology advancements,” says Josh Book, CEO and founder of ParameterInsights Inc., a financial-services research and consulting firm. ”It will be the firms who innovate using data and customer-engagement tactics to drive awareness to wealth management that will be the winners in the long run.”
“Today, the challenge is that the traditional approach is no longer the way to move forward,” Mr. Book adds.
Traditionally, robo-adviser platforms launched business-to-business platforms early on, allowing financial advisers and investment firms to sign up clients at a discounted rate. But many in the traditional investment community considered the online offerings to be competitors and uptake by wealth managers was slow.
Now, after five years, the investment industry is seeing more collaboration between the two platforms, with several robo-adviser platforms entering partnership agreements with wealth-management firms.
And while Wealthsimple is Canada’s largest online portfolio manager, it isn’t the first platform to recognize the importance of collaborating directly with investment firms.
Last year, Nest Wealth launched a second platform: Nest Wealth Pro. Unlike its retail offering, the business platform allows firms to license an online portfolio platform without having to hand over assets to a third party, or limit their clients to only ETF portfolios. Since launching, the business platform has signed more than a dozen deals including with large financial institutions such as National Bank of Canada (which also holds a minority stake in Nest Wealth), Credential Financial Inc., MD Financial and Aligned Capital Partners. They have added thousands of accounts to the platform, and expect that number to move above 100,000 accounts in the next quarter.
“As margins compress and customer expectations rise, firms need to transform their entire operation from a paper to a digital process,” says Randy Cass, CEO of Nest Wealth. “Nest Wealth Pro allows our clients to do business under their brand, using their procedures and expertise but at the same time reducing operational costs and increasing customer satisfaction. There’s no question the pace of digitization in our industry is accelerating.”
Last summer, Vancouver-based WealthBar partnered with insurance provider PPI Financial Group to allow insurance advisers to access professionally managed investment portfolios for clients.
In November, 2017, investment fund manager Invesco Canada Ltd. launched advisorDUO, a robo-adviser platform that is used exclusively by financial advisers. Already, there are nine mutual-fund firms signed up on the platform, including Sterling Mutuals, Keybase Financial Group Inc., Canfin Financial, Professional Investments, Groupe Cloutier and GP Wealth Management Corp.