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Welcome to the first part of our Q&A mini-series with some of the experts we interviewed in our recent Future of Investment Report...


In what ways is your firm innovating and using tech to provide better services to clients?

"At Wealthsimple we really believe in the power of the combination of humans and technology. We use technology to automate the selection and execution of our investment portfolios and strategies, but we combine that with access to human financial advice to help clients through that process as they need it. What that means in practice is you can sign up on our app and get invested in less than 10 minutes. In that process you’re asked a number of questions and then recommended a specific portfolio based on your financial circumstances and goals. We have a set of defined portfolios at different risk levels that are designed by our human investment research team and then the matching of those portfolios is done automatically with technology.

"Then we use technology to take care of all of the usual things you need to do around managing that portfolio. We call it investing on auto-pilot—automatic rebalancing, dividend reinvestment, all of the normal functions—and then likewise once a client has invested with us we use technology to make things very transparent for them so they’re always able to see their portfolio and account data anytime, anywhere, on a mobile device or web browser. And then finally we use technology to continue to help engage and educate our clients to help them become better investors and learn more and more about investing, so we deliver lots of articles and other types of content through the platform."

What advantages do robo advisors have over traditional wealth managers?

"There are a few things. The first is that robo advisors are generally tech-first companies—50% of our workforce are either in engineering or product, and we have less reliance on legacy technology systems so we’re really able to build products that put the customer at the centre rather than being structured around existing business practices. For example, we believe in building easy and simple to use native apps that really reflect the way our customers live their lives these days, in comparison to many systems from legacy environments that are web-based portals that are not as easy to use. With that technology we’re able to provide data transparency where you can see everything in one place—your account holdings, your performance, your investment history—while also being able to take the action that you need right then and there.

"A number of reports have shown that customers increasingly want the ability to self serve and be in control of their own money, which robo technology has allowed them to do in a very different way, rather than being as reliant on human advisors. Because we’re a digital business we don’t have the high cost of maintaining a branch network, and through automation we can reduce back office costs, and then we’re able to pass all of that on to the customer in lower fees. And then finally we have the ability to build and ship products really quickly because we fully control our own stack, we’re not using as many third-party systems that we don’t have control over. If we can make the wealth management market more accessible to more people, it’s good for clients and it’s good for the industry overall."

What are the biggest drivers for digital transformation in the wealth management industry?

"With regard to Covid we have definitely seen that the pandemic has accelerated the digital transformation that was already under way—suddenly everybody needs to be able to access everything remotely. When it comes to financial accounts, people need to be able to access them without setting foot in a branch, without meeting a person face to face, so how do you actually maintain and build a stronger relationship with your customers in that environment? How can you actually use technology to help provide reassurance and engagement that makes people more comfortable in this highly uncertain moment?

"We’re starting to see this shift where people are looking for ways to manage their money digitally who may have previously been content with an in-person service. Perhaps even more during the market volatility over the past couple of months, we have seen people become more cognisant and aware of how much they are paying in fees, because when market returns are not as strong, people start to ask why they are paying so much for a traditional advisor."

What technology are you most excited about that could in the future change the way people invest?

"There’s a lot of thinking at the moment about designing products around behavioural economics and providing more relevant nudging to help people adopt good financial habits and behaviours. Technology can be incredibly helpful in this domain. In our Canadian business we redesigned our product experience so that the dashboard the client sees focuses on the growth that you gain over time from depositing as well as from market returns. What really drives growth over time is consistent saving behaviour, so we wanted to make sure both of these pieces were being taken into account.

"The other thing is we know that consumers respond really strongly to comparisons to what other people like them are doing, so potentially using information that helps people have points of comparison that encourage them to follow good savings behaviours. In the same vein, we see an opportunity for products to be more customer focused in a way where you can predict client needs based on your relationship with them and make that process as seamless as possible."

Click here to download the full report.

Post Author: Ben Edwards