Toronto-based Bank of Montreal’s (BMO) new robo-advisor platform may be targeted at self-directed investors, but financial advisors will still be able to use the automated service to build their businesses, says Charyl Galpin, head of BMO Nesbitt Burns Inc., the bank’s brokerage arm.
See: BMO launches robo-advisor platform
Advisors can provide a link to BMO SmartFolio to a client or a client’s child through which they can sign up and open an account. During the onboarding process, the investor can give the advisor permission to view his or her SmartFolio account.
Doing so will allow the advisor to monitor the account as part of the client’s overall investment portfolio and to maintain a relationship with an individual, who might not require a full-service advice relationship at the moment but who will at a later time.
“It’s almost incubating future investors for the wealth advisory channel,” says Galpin, adding that SmartFolio provides a great opportunity for advisors to build relationships with the next generation of investors in their current client households.
BMO became the first Canadian bank to launch a robo-advisor platform to all consumers this week after initially offering the service to employees this past December. Investors can sign up for an account online with a minimum investment of $5,000.
Investors will be asked a series of questions during the account opening process and will be recommended one of five portfolio options based on their answers. Each of those portfolios consists solely of BMO exchange-traded funds (ETFs). More ETFs may be added in future based on investor demand. Financial professionals at BMO Global Asset Management manage the portfolios.
As well, investors will be able to contact licensed individuals should they have any questions about the sign-up process or their portfolios. These licensed representatives can be accessed by live chat, telephone or email.
Digital-assisted investing is not a new concept for BMO, which has offered its adviceDirect platform through its InvestorLine discount brokerage since 2012. SmartFolio is not meant to either replace or compete with adviceDirect, says Galpin. Instead, the new robo-advisor is part of a continuous service option across BMO, from do-it-yourself (DIY) investing to digital-assisted options to the full-service advice offered by Nesbitt or BMO Private Banking advisors.
With Switzerland-based independent research firm My Private Banking predicting that robo-advice will be a $300 billion market in North America by 2020, Galpin sees plenty of potential for BMO: “Certainly, there’s a huge growth opportunity in this market for us, which we think is quite attractive.”
BMO SmartFolio is now competing for that growing market share with several independents including, Wealthsimple Financial Inc., Nest Wealth Asset Management, Smart Money Capital Management Inc., all of which are based in Toronto, as well as Vancouver-based WealthBar Financial Services Inc. and Modern Advisor Canada Inc. and Oakville, Ont.-based Invisor Investment Management Inc.
Besides BMO, other members of Canada’s Big Six banks — such as Canadian Imperial Bank of Commerce, Royal Bank of Canada and Bank of Nova Scotia — have all indicated that they are looking into digital advice options. Toronto-based HollisWealth Inc., a subsidiary of Scotiabank, will launch a robo-advisor platform in 2016. As well, Montreal-based National Bank of Canada launched InvestCube through National Bank Direct Brokerage Inc. in 2014, which automatically rebalances a DIY investor’s portfolio.