Canadians are keen to consider robo-advice when making investment decisions, a recent Accenture investor study revealed.
The study found that four of 10 said they don’t feel like they “get what they pay for” with traditional advisors, leading them to explore online robo-advice and even self-investing.
Traditional wealth management companies have been forced to adopt online tools to keep up with emerging technology and offerings from digital-first platforms. In fact, Kendra Thompson, Accenture’s global lead for wealth management, says there’s no player in the market that isn’t layering in digital capabilities today.
“In the market today, we see the tip of the iceberg. The pilot project or the first year. Pretty much all the major players on both sides of the border are embracing a hybrid model,” says Thompson.
A hybrid model is one that equally combines robo-advice and human advisors for investment decisions. Thompson calls this a “thoughtful coupling.”
“We’re talking about convergence… Instead of just adding a new bell or whistle, they are changing the way the industry makes money and manages money and the actual business they are in,” she explains.
Seven out of 10 respondents told Accenture that they are in fact already using at least one digital tool when it comes to financial services—that could mean a mobile app or a digital-only transaction.
The desire to go online for wealth management has opened up the market to fintech players who are pitching new value propositions to investors.
A few months ago, Wealthsimple CEO Michael Katchen told Techvibes how his company was once dismissed by the big banks but has since seen them launching competitor products and even approaching Wealthsimple for partnerships.
While direct-to-consumer fintech companies have been giving traditional banks what Thompson calls a “kick in the butt,” she says that too much energy has been focused on these new entrants taking over the wealth management market.
“They’ve shown an appetite for digital investing and shown the rich experiences in digital and the whole industry that has taken note,” she says. “It’s our strong belief that the winners will be incumbent companies partnering with technology companies.”
Wealthsimple has roughly an 80 per cent share of the Canadian market in the digital advice space. They’ve shown how wealth management is scalable and can be delivered in less expensive ways.
In North America, online investment platforms have redesigned service costs and as a result lowered the cost dramatically of opening a wealth management account, Thompson explains. But that doesn’t mean digital is going to take over completely.
“It is our strong point of view that the industry will remain a very human-centric industry,” she says.
Many Canadians want the best of both worlds; humans and robots guiding their investments. But the Accenture study did find that more than half of Canadian investors still feel human advisors provide the best customized advice.
The full report, Powering Hybrid Advice in Canada, can be found here.