Bank launches ‘robo-ad­viser’ ser­vice

Bank of Mon­treal first with on­line port­fo­lio man­ager

The Guardian (Charlottetown) - - OBITUARIES / NEWS -

The Bank of Mon­treal has launched an on­line port­fo­lio man­ager, mak­ing it the first of the big five Cana­dian banks to wade into the “robo-ad­viser” busi­ness.

Af­ter a trial run that started on Dec. 7, the ser­vice — dubbed SmartFo­lio — is avail­able to all in­vestors.

While other large Cana­dian banks have hinted they’re con­sid­er­ing a foray into on­line in­vest­ment ad­vice, BMO is the first of the big five banks to launch such a ser­vice, de­spite elect­ing to build the prod­uct in-house rather than part­ner­ing with a fi­nan­cial tech­nol­ogy firm as some of the other banks are ex­pected to do.

The launch of SmartFo­lio re­sponds to con­cerns that banks risk los­ing mar­ket share if young, tech-savvy mil­len­ni­als ditch tra­di­tional bank­ing in favour of fin­tech star­tups that of­fer low-cost, on­line in­vest­ment man­age­ment ser­vices.

Joanna Rotenberg, head of per­sonal wealth man­age­ment at BMO, says the bank’s brand gives it an ad­van­tage over up­starts pro­vid­ing sim­i­lar ser­vices.

“We’ve got the re­li­a­bil­ity as­so­ci­ated with a 200-year-old bank­ing in­sti­tu­tion, and at the same time we’ve got a lot of the things that some other play­ers in the mar­ket are of­fer­ing, which is sim­ple and dig­i­tal tools,” Rotenberg said.

“So we’re re­ally bring­ing to­gether the best of both worlds.”

Typ­i­cally, clients with­out enough as­sets to war­rant hir­ing a full-ser­vice in­vest­ment ad­viser have had few op­tions be­sides mu­tual funds. Robo-ad­vis­ers such as Wealth­Sim­ple, Nest­Wealth and WealthBar aim to fill that gap in the mar­ket­place by pro­vid­ing a cost-ef­fec­tive in­vest­ment op­tion for such clients.

Al­though any­one can use SmartFo­lio, BMO says it de­signed the ser­vice with mil­len­ni­als in mind given they pre­fer to do things on­line and may have lim­ited in­vest­ment knowl­edge.

“We felt it was an op­por­tu­nity to re­ally be able to tap into that seg­ment that’s on the move and wants to be able to do what­ever they want to do from wher­ever they are,” Rotenberg said.

In or­der to ap­peal to its tar­get de­mo­graphic, the bank says it used clear, jar­gon-free lan­guage and re­spon­sive web­site de­sign that pro­vides the same ex­pe­ri­ence for users re­gard­less of whether it’s ac­cessed through a com­puter, a tablet or a smart­phone.

Clients look­ing to sign up for the ser­vice start by fill­ing out an on­line ques­tion­naire that gath­ers in­for­ma­tion about their in­vest­ment goals, their time hori­zon and their tol­er­ance for risk.

Af­ter an­swer­ing a se­ries of ques­tions about their net worth, an­nual in­come and how much loss in their port­fo­lio they can bear — in­clud­ing graphs that help il­lus­trate volatil­ity and the re­la­tion­ship be­tween risk and re­ward — the client is en­rolled in one of five model port­fo­lios made up of BMO’s own ex­change­funds, or ETFs.

Cus­tomer sup­port is pro­vided via live chat, email and tele­phone, so a visit to the branch is not re­quired.

The min­i­mum ac­count size for SmartFo­lio is $5,000 and fees are charged as a per­cent­age of as­sets un­der man­age­ment, start­ing at 0.7 per cent for the first $100,000 and grad­u­ally mov­ing lower for amounts above that. There is a min­i­mum fee of $60.

“We’ve got the re­li­a­bil­ity as­so­ci­ated with a 200-year-old bank­ing in­sti­tu­tion, and at the same time we’ve got a lot of the things that some other play­ers in the mar­ket are of­fer­ing, which is sim­ple and dig­i­tal tools. So we’re re­ally bring­ing to­gether the best of both worlds.” Joanna Rotenberg, head of per­sonal wealth man­age­ment, BMO

CP PHOTO

Bank of Mon­treal’s Joanna Rotenberg is pic­tured in the bank’s Toronto of­fices re­cently. Rotenberg is lead­ing BMO’s launch of their on­line port­fo­lio man­age­ment ser­vice, or "robo-ad­viser."

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