No lumber, no slumber: Canadian robo steps up

As I point out in my recent report on robo advisors in Canada, price points for digital advisors are on the high side, even for the lumbering Canadian advice market. Especially as these robos are not known for standout service, as other bloggers have noted.

So should it be a surprise that Invesco Canada has developed plans to roll out Jemstep in Canada, the digital advice service the parent company acquired in January 2016?

Opportunity beckons

The truth is that the roll out has relatively little to do with the small Canadian market, and everything to do with the US, and eventually, the UK, markets. Invesco has been digesting Jemstep for more than a year now, quietly making Jemstep’s robust aggregation and client servicing functions available to those advisors who want them.

Fine tuning is fine, but at some point, it’s time to go big. With prices for robo tech on the wane, there is pressure on Invesco top brass to make something of this acquisition. Indeed, Peter Intragli, CEO of Invesco Canada and head of North American distribution, signaled this launch a while back. It is also worth noting that stand alone Canadian robo WealthSimple is taking a similar tack to Invesco, launching in the US and hiring London based consultants to guide its UK entrance. I’ll talk more about the thinking behind both firms' move in a later post.

Robo Advice Comes to Canada

Newly elected Canadian Prime Minister Justin Trudeau took heat back home earlier this year for imploring his Davos audience to recognize Canada not for its resources, but for its resourcefulness. Yet the intent of his statement was less to diminish the contribution of the energy sector to the Canadian economy than to underscore its distorting effects.

Remember, oil rich Canada passed the global financial crisis with flying colors. It took the end of the energy boom, coupled with the onset of digital revolution, to open the bank dominated financial services sector to fresh air and force a stolid wealth management industry to reckon with digital entrants.

Fees for investment management services in Canada are among the world’s highest, as are barriers to industry entry. For startups, the difficulty of taking on the Big Five banks is matched by challenges in getting funded. The small Canadian VC community is oriented more toward payments solutions and cybersecurity than investments, and no wonder: it’s tough to grow scale up fast in a country of 35 million.

Yet, as I point out in my recent report, Thawing Market, The Growth of Robo Advice in Canada, there is a lot happening north of the US border. Despite the odds, investments oriented fintech is gaining steam. It’s not a coincidence that the erstwhile Bank of Montreal, or BMO, this year became the first North American bank to launch its own robo-advisor. Particularly interesting is degree to which the lessons learned from the recent disruption extend beyond Canada’s borders to the US and other markets. I’ll talk about these lessons in my next post.