One of Canada’s robo-advisor firms is breaking the mould in terms of the products available through the platform and offering clients more than exchange-traded funds (ETFs), providing a glimpse into the possible future of these online platforms.

In late February, Vancouver-based WealthBar Financial Services Inc. began offering its clients a suite of pooled funds from Vancouver-based Nicola Wealth Management Ltd. (NWM) which owns a stake in WealthBar, in addition to ETFs. This is a first in Canada; typically, robo-advisors create and automatically rebalance portfolios consisting of ETFs exclusively.

Pooled funds are investment vehicles in which several individuals aggregate their assets to take advantage of certain features available to institutional investors, such as lower trading costs, diversification and professional money management.

The ability to access NWM’s investment strategies directly and to invest in asset classes not correlated to the stock market were the main drivers in WealthBar’s decision to offer these pooled funds, says Tea Nicola, CEO and co-founder of WealthBar.

“It was the desire to offer that pension-plan style of investing,” Nicola says.

Pooled funds typically are accessible only by affluent clients because of high minimum account sizes. However, all of WealthBar’s clients will have access to 15 of 18 pools from NWM – although it’s unlikely that the pools will be recommended to clients with accounts of less than $10,000.

One of the funds that WealthBar’s clients will have access to is NWM’s Core Portfolio, a pooled fund created to accommodate the investment needs of friends and family of clients whose account sizes didn’t quite meet NWM’s usual minimum account size of $500,000. The Core Portfolio has a management expense ratio (MER) of 0.94%.

“[The Core Portfolio] is really a blend of all our other pools in a mutual fund wrapper,” says John Nicola, NWM’s chairman and CEO. “It works really well, it’s done the job, it’s very cost-efficient, it’s very diversified.”

In addition to the Core Portfolio, WealthBar clients may access other pools from NWM, including NWM Canadian Tactical High Income, which has an MER of 0.7%, and the NWM U.S. Equity Income Fund, with an MER of 0.65%. All of these pools, including the Core Portfolio, are managed directly by NWM.

The introduction of pooled funds is unlikely to be the final change in the robo-advisor model, as these online platforms continue to develop and evolve.

“We’re really in the early days of what the wealth-management industry is going to look like,” says Randy Cass, founder and CEO of Toronto-based robo-advisor Nest Wealth Asset Management Inc.

Another Toronto-based robo-advisor, Wealthsimple Financial Inc., is planning to expand its tax planning service and portfolio diversification, which could mean new products, says Michael Katchen, Wealthsimple’s founder and CEO: “[Portfolios will] mostly be ETFs, but you might see us broaden beyond that.”

For Tea Nicola’s part, she believes robo-advisors are capable of becoming full-service shops. Indeed, the change that these online platforms bring to the financial services sector is about relationships, not products, she says: “Robo-advisors are about different things than investment products and styles. It’s really about how the relationship between the advisor and the client is managed.”

For the time being, however, ETFs remain the dominant investment vehicle in the robo-advisor space. Nest Wealth, for example, continues to use ETFs exclusively in its portfolios.

“At any point, if we came to the conclusion that it wasn’t possible to get a properly diversified portfolio through low-cost ETFs, then, of course, we’d look at alternatives,” Cass says. “But, right now, we think that it’s entirely appropriate to build portfolios exclusively using low-cost, liquid, plain-vanilla, blue-chip ETFs.”

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