In its 34-page report the analysts at Canaccord spent some time discussing developments trends within the money management sector. The report centered on three trends:
? Acquiring robo-advisers. Of late there have been a minimum of two Canadian types of gaining exposure this market: Wealthsimple purchased ShareOwner Investments (the very first acquisition in Canada between two online platforms); and Invesco’s purchased California-based Jemstep.
? Partnering with existing robo-advisers. The report noted that through partnerships, asset managers can quickly attract new customer segments with no potential costs and risks in implementing a brand new platform onto legacy systems. Within the U.S. Fidelity has applied for two partnerships while Power Corp. (the parent of Great-West Life and IGM Financial) has decided to invest up to $30 million into Wealthsimple.
? Developing in-house systems. Two U.S. firms C Charles Schwab and Vanguard C go this route that can take longer than another two alternatives. However the approach allows an inexpensive model to become developed included in a plan to capture a wider spectrum of assets. In Canada CI Financial “is in early stages of its robo-advisers” through its Assante unit while its recent acquisition of First Asset (which is mainly an ETF provider) “can be a starting point for portfolio asset allocation.” Bank of Montreal went further and today offers BMO SmartFolio which features low fees to acquire a $5,000 minimum investment. Royal Bank and CIBC also have announced their intentions to develop similar services.
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