Digital wealth managers, or robo-advisors, are active across North America. In fact, these advisors have already attracted money from Canadian investors, says business-building expert Grant Shorten.

Shorten, director of Strategic Insights with Renaissance Investments, has offered advice on how to compete with robo-advisors. He answered a question posed by CIBC Wood Gundy portfolio manager Janine Guenther.

Guenther: How can I position my practice to compete with digital wealth managers, or robo-advisors? 

Shorten: Robo-advisors have only been operating in the U.S. for a few years, and they’ve gathered an estimated $20 billion in assets under management. And, as expected, the robo-advisor phenomenon recently crossed the border into Canada, and has attracted money from Canadian investors.

Read: Robo-advisors are here to stay: EY

And, as we speak, more firms are entering the robo-space—hoping to take advantage of what appears to be a growing trend. So what exactly do they offer the investor?  Well, most robo-advisory firms offer their clients the following, for a very low fee.

  • Low minimum investments
  • Full discovery processes and risk profiling
  • Financial plans
  • Algorithm-based portfolio construction, using mainly ETFs
  • Automatic rebalancing, along with basic ongoing advice

As a result, full-service advisory businesses will have to change. That’s because we’re living at a unique moment in history, where two powerful forces are converging at exactly the same time. Those are CRM2, or what I call the fee-transparency revolution, and the potential growth of the robo-advisor network.


As these two forces continue, the world of the full-service advisor and the financial planner are impacted. First, we see downward pressure on fees, and then increased demand for the evidence of value. Finally, we see increased demand for top-notch services and attention.

Read: Should you worry about robo-advisors?

But, the good news is the full-service advisor will have the opportunity to survive and thrive in the new world order. You can do this by hard-wiring your business practice for success in the following four ways.

  1. Understand what services clients value.  The notion of value is in the eye of the beholder, so value means different things to different clients. Learn what each client wants and needs, and then deliver consistently. Read: What you can learn from U.S. advisors
  2. Prepare for tough questions on fees. Create honest responses to fee questions that will inevitably be raised. Then, practice your responses so they become internalized.  Many of your clients just want to understand what your costs are all about. Read: How to answer common fee questions
  3. Offer a list of all of the services you provide. Most of your clients don’t know what you do behind the scenes in order to manage accounts and run day-to-day operations, as well as protect and grow their wealth. Make sure to draw a distinct contrast between what robo-advisors offer, and what you offer. Then share this list openly.
  4. Expand your network. Reframe your business to look and feel like a family office. Do this by building more strategic alliances with other professionals (including accountants, lawyers, and private bankers), and include strategic partners and experts on your firm’s brochures, newsletters and website. This will show that you offer a broad range of holistic services, where cost becomes largely irrelevant to clients. Read: Book-building tips for new advisors, and Why you should build a diverse team

The robo-advisor and the fee transparency revolution are providing a tremendous opportunity for us to redefine how we approach our businesses. We must deliver real value to investors who are seeking connections with advisors.


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Jake Chazan

Interesting article. I must, however, disagree with the premise that robo-advisors are taking assets away from traditional investment advisors. If you look at the market segment that they cater to, it’s basically clients that IAs couldn’t keep. Too small and high cost. They may be cannibalizing clients from online brokers or mutual funds. But the IAs at the bank brokerages would seem to have nothing to fear. The robo-advisors have not one shoe fits all, but five or six shoes. That’s it. Their clients do not for the most part need a host of other products yet-insurance, RRSPs, RRIF’s etc. time will tell how much market share they take from the incumbents. But what will be more interesting is who they take it from. An investor with $ 2 million of investible funds won’t, I don’t believe, make the shift. The cost saving in the absence of comparative returns is at best anecdotal information. They offer a commoditized product where in the end the primary way they will differentiate themselves from the other is cost. Time will tell if I’m wrong. But this democratization of investment management is a good thing, if the millennials can take the heat when the market cracks.

Sunday, January 3 @ 4:26 pm //////


I wasn’t aware that robos have «…quickly attracted several billion from Canadian investors.» Are you sure the numbers are that high in Canada?

Thursday, October 1 @ 12:05 pm //////

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