[Communication Series] Three Topics for the Modern Advisor - Part 3

May 13, 2016 at 3:20 PM / by Dylan Friedmann  /  5 minute read

Robo Advisors – How will they impact you?


Welcome to the 3rd installment of my 3 piece series, 3 Topics for the Modern Advisor. To recap the first segment examined Gen Y, Gen X and Baby Boomers, followed by a look at Social Media who in the industry is using it and how. Now it is time to consider the robo advisor.

Everyone is talking about how Robo advisors will change the landscape of the industry. This is a topic that is still under debate, the what, who, why and how of the Robo Advisor. 

Let’s start at the beginning. What is a Robo Advisor?

Well it depends on who you ask. It could be as simple as: “A robo advisor is a low fee, online wealth management service” (10) Robo-advisors are a class of financial advisor that provides portfolio management online with minimal human intervention (11) Or robo-advisor may be defined as an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners. (12) So generally the definitions are similar, but who uses them, why and how? The appeal of the robo-advisor can be tied to lower fees and quick online tools. (13) Robo Advising breaks down the investment barrier felt by younger generations with lower asset bases who want to start an investment plan. (14)

Canadian Business references a TD study that showed that almost a third of Canadians between the ages of 18 and 33 report that they are “not at all knowledgeable” about retirement savings plans. When the group was asked to provide additional detail more than 40% of respondents indicated they put off learning about investing because financially they do not have the funds to contribute, and others said that they were saving for other purposes (28%). (14)

So it seems that the robo advisor may appeal to the Gen Y, but Gen X and baby boomers may also look for simple online solutions with low fees.

The good news for the independent (human) advisors in the industry is that various sources indicate that the wealth and insurance advisor is still very much required to provide advice and manage more complex requests. A recent Accenture research “the Rise of Robo Advice” paper provided that 77% of wealth management clients trust their financial advisor and that they want to continue to work with them on their wealth management.(13)

Advocis also issued the Consumer Voice Survey 2015 and results showed that the vast majority of people who work with advisors (96%) say the advice they receive is valuable. Also noted was that for the majority of those consumers polled professional advice “was not only sought- but largely required- for more complex areas such as investment planning (95% received advice), retirement planning (93% received advice), wealth accumulation (88% received advice) and insurance (80% received advice). (15)

The How is a bit more complicated. It can be seen that Robo-advisors have a significant presence in the United States (estimates suggest they manage more than $15-billion U.S. in assets). However in Canada they are in the early phase and some of the players only operate in certain provinces. (16)

If you look at some of the most established in the country they operate and provide services in different ways. Examples of firms gaining traction are: Nest Wealth (Ontario) Wealthsimple (Ontario and British Columbia), WealthBar  (B.C., Alberta and Ontario invitations only), ModernAdvisor, ShareOwner, BMO’s SmartFolio, Questrade’s Portfolio IQ and Invisor (16,17) The services vary; WealthSimple offers the only mobile app, Nest Wealth is the only platform to offer a flat subscription price – therefore prices are not tied to the size of the asset, WealthBar offers dedicated financial advisors as part of their service and ModernAdvisor offers socially responsible investing at the same fee as conventional investing. (17)

Safe to say there is a lot to consider, but consumers still value advice. As an advisor make sure you are staying relevant, you are open to clients learning about you and using tools at your disposal to understand and connect with prospects and clients alike. 

There are many changes in today’s insurance industry – are you keeping pace? Make sure to keep current about the exciting initiatives around the corner that help you as a professional in this industry. To learn more about APEXA and our launch this year – visit http://www.apexa.ca/become-a-listed

Until our next insurance discussion!

A-Lister APEXA Video


  1. http://insurance-journal.ca/article/generation-x-seeks-advice-and-y-wants-to-buy-online/
  2. https://en.wikipedia.org/wiki/Millennials
  3. http://www.canadianbusiness.com/innovation/the-millennial-majority-workforce/
  4. https://www.bmo.com/pdf/mf/prospectus/en/BMO_WealthInstitute_QR_Q1_2014_EN_LQ.pdf
  5. http://www.ey.com/CA/en/Newsroom/News-releases/2015-Life-annuity-insurance-outlook
  6. http://www.marketwatch.com/story/10-things-generation-x-wont-tell-you-2014-06-27?page=2
  7. http://www.ey.com/CA/en/Industries/Financial-Services/Insurance/Canadian-life-annuity-insurance-outlook-2015-Invest-in-digital-and-analytics
  8. http://insurance-journal.ca/article/life-insurers-take-to-social-media/
  9. http://insurance-journal.ca/article/use-social-media-to-strengthen-relationships/
  10. http://www.questrade.com/robo-advisors#What-is-a-robo-advisor
  11. https://en.wikipedia.org/wiki/Robo-advisor
  12. http://www.investopedia.com/terms/r/roboadvisor-roboadviser.asp
  13. http://www.theglobeandmail.com/globe-investor/investor-education/canadian-financial-firms-embrace-robo-advisers/article27768789/
  14. http://www.canadianbusiness.com/investing/how-millennials-are-forcing-financial-firms-to-rethink-retirement/
  15. http://www.advocis.ca/pdf/Consumer-Voice-2015.pdf
  16. http://www.theglobeandmail.com/globe-investor/funds-and-etfs/etfs/robo-advisers-have-arrived-and-may-be-just-what-your-portfolio-needs/article20585868/?page=all
  17. http://youngandthrifty.ca/complete-guide-to-canadas-robo-advisors/

Topics: Life Insurance Business as Usual

Dylan Friedmann

Written by Dylan Friedmann

As VP Client and Partner Engagement, Dylan is responsible for the client experience; business development, relationship management, training, communications and marketing to all levels of APEXA clients. APEXA clients include Insurance carriers, MGA’s and the broker market. // En tant que vice-présidente expérience clients et partenaires, Dylan est responsable de l'expérience client, du développement des affaires, de la gestion des relations, la formation, la communication et du marketing pour tous les niveaux de clients d’APEXA. Les clients d’APEXA comprennent les assureurs, les agents généraux et le marché des courtiers.

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