How to stay relevant in the age of robos

By Simon Doyle | February 16, 2017 | Last updated on February 16, 2017
3 min read

Investment managers from BMO and Wealthsimple offered tips for financial advisors wondering how to remain relevant amid accelerating technological change.

At a CFA Society Toronto event on Wednesday, the investment managers said advisors embracing technology can add value to their practice.

“I tend to think a lot more about sources of alpha — how we can actually add value to our investment management process,” said James Thai, portfolio manager with BMO Global Asset Management. Here are tips on how to do that.

Big data

Thai said skills in big data are important as data analysis and machine learning are making for new ways to inform investment management. He pointed to reams of data available from satellite imagery to mobile phone usage and tracking, which could allow analysts to get precise readings of consumer sentiment and behavioural shifts, for instance.

“These are all potential areas to look at to learn about how to invest and how to make investment decisions,” Thai said. “With big data, you have the potential to know exactly what is going on. Everyone has a cellphone. Google or Apple, they know where you are.”

Largely due to fee pressures, advisory firms are looking for more automation and scale to reduce costs. Advisors who aren’t adding value are probably not going to grow revenues, he said.

Read: Wealthsimple says it can compete in U.S. market

Client behaviour

Dave Nugent, chief investment officer of online provider Wealthsimple, said his firm is hiring someone about every two to three weeks and is often looking for technical skills, especially where you can help understand client behaviour, place clients into behavioural groups and communicate with them in a personal way.

“I talk to advisors all the time who say, ‘Wouldn’t it be awesome if you knew exactly which clients were panicking?’ ” Nugent said.

Nugent agreed that advisors must hone skills that can’t be easily commoditized.

“The moment it becomes black and white, technology can replace it. But if the thing that you do is adding value that’s unique to you, then you’ll probably thrive and use technology to your advantage, to help you scale and be more effective and efficient,” he said.

Read: 5 tips for competing as a small, independent dealer

Planning models

As clients become more sensitive to pricing, Nugent agreed there are opportunities to use big data for more sophisticated financial planning.

“I think the behavioural piece will only get better as time goes on, to help people make better decisions,” Nugent said.

Financial advisors should embrace technology, Nugent said, as he predicted a shift to more streamlined, automated services and a decline in advisor numbers.

Nugent said he foresees fewer advisor offices as more clients ask for fewer face-to-face meetings. Already, several big financial firms are moving to “service desks,” he said, run by two or three salaried people for smaller-account clients.

“The advisor space is going to be shrinking quite rapidly, and technology will enable the good advisors to succeed and thrive. The ETFs side it will continue to grow. Obviously, there are more and more [ETF] strategies coming out,” he said.


Another growing career path is regulatory, he noted. “Compliance is going only up,” Nugent said. “If you want to be in compliance, you’ll always have a job.”

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Simon Doyle