BMO launches online portfolio manager service

TORONTO - The Bank of Montreal has launched an online porfolio manager, making it the first of the big five Canadian banks to wade into the "robo-adviser" business.

See Full Article

After a trial run that started on Dec. 7, the service - dubbed SmartFolio - is available to all investors starting today.

While other large Canadian banks have hinted they're considering a foray into online investment advice, BMO is the first of the "big five" to launch such a service, despite electing to build the product in-house rather than partnering with a financial technology firm as some of the other banks are expected to do.

The launch of SmartFolio responds to concerns that banks risk losing market share if young, tech-savvy millennials ditch traditional banking in favour of fintech startups that offer low-cost, online investment management services.

Joanna Rotenberg, head of personal wealth management at BMO, says the bank's brand gives it an advantage over upstarts providing similar services.

"We've got the reliability associated with a 200-year-old banking institution, and at the same time we've got a lot of the things that some other players in the market are offering, which is simple and digital tools," Rotenberg said.

"So we're really bringing together the best of both worlds."

Typically, clients without enough assets to warrant hiring a full-service investment adviser have had few options besides mutual funds. Robo-advisers such as WealthSimple, NestWealth and WealthBar aim to fill that gap in the marketplace by providing a cost-effective investment option for such clients.

Although anyone can use SmartFolio, BMO says it designed the service with millennials in mind given they prefer to do things online and may have limited investment knowledge.

"We felt it was an opportunity to really be able to tap into that segment that's on the move and wants to be able to do whatever they want to do from wherever they are," Rotenberg said.

In order to appeal to its target demographic, the bank says it used clear, jargon-free language and responsive website design that provides the same experience for users regardless of whether it's accessed through a computer, a tablet or a smartphone.

Clients looking to sign up for the service start by filling out an online questionnaire that gathers information about their investment goals, their time horizon and their tolerance for risk.

After answering a series of questions about their net worth, annual income and how much loss in their portfolio they can bear - including graphs that help illustrate volatility and the relationship between risk and reward - the client is enrolled in one of five model porfolios made up of BMO's own exchange-traded funds, or ETFs.

Customer support is provided via live chat, email and telephone, so a visit to the branch is not required.

The minimum account size for SmartFolio is $5,000 and fees are charged as a percentage of assets under management, starting at 0.7 per cent for the first $100,000 and gradually moving lower for amounts above that.

For a $5,000 account, the annual fee comes out to $60, according to an online calculator featured on the SmartFolio site.

Although BMO is touting the service as low cost, its fees are somewhat higher than those offered by some of the upstarts.

For example, Wealth Simple and WealthBar both offer free accounts for those with less than $5,000 to invest. At WealthSimple, clients whose accounts are between $5,000 and $250,000 pay 0.5 per cent, while WealthBar charges 0.6 per cent of assets under management for accounts between $5,000 and $150,000.

The fees charged by online portfolio managers typically don't include the charges levied by ETF providers.

Although "robo-adviser" has caught on as a catchy phrase to describe online portfolio management, most providers of the service - including BMO - note that it's a bit of a misnomer.

Clients may be able to access the service without a face-to-face meeting with another human being, but the portfolios are still managed by professional money managers.

"We're very much human managed," Rotenberg says. "You think of Hal from 2001 Space Odyssey, but really there is no Hal."



Advertisements

Latest Economic News

  • Metro profit beats estimates despite lower produce, meat, dairy prices

    Economic CBC News
    The chief executive of Metro Inc. says prices for produce, meat and dairy were lower in its most recent quarter, but the grocer still increased its profits and beat analyst estimates. Food prices were about two per cent lower than a year ago during the 12-week period ended March 11, CEO Eric La Fleche told a conference call with financial analysts Tuesday. Source
  • Uber looks towards electric aircraft for next ride-hailing project

    Economic CTV News
    NEW YORK - Uber is taking to the skies with its next project - "flying cars" - even as all eyes are on its problems on the ground. On Tuesday, the embattled ride-hailing company announced plans for an on-demand network of electric aircraft that can take off and land vertically, like a helicopter. Source
  • Billy Bee and Doyon honey sold in Canada to be made in Canada, too

    Economic CBC News
    The company that owns the Billy Bee and Doyon honey brands says it will start using only Canadian honey for both products in Canada this year. McCormick & Co. says Billy Bee and Doyon products containing all-Canadian honey will start appearing on store shelves in June, while the Billy Bee organic variety will arrive before the end of the year. Source
  • Trump plans to slash U.S. corporate tax rate to 15%

    Economic CBC News
    President Donald Trump plans to stick with his campaign pledge to slash the corporate tax rate from 35 per cent to 15 per cent, but the dramatic cut raises a problematic question for the White House: How can the president deliver the "massive" tax cut he promised without also blowing a massive hole in the budget? Source
  • Reducing debt among Barrick Gold's priorities: president

    Economic CTV News
    TORONTO -- Barrick Gold says it will focus on maximizing its free cash flow, reducing debt and maintaining investment discipline in the year ahead. Company president Kelvin Dushnisky told Barrick's annual meeting Tuesday that the gold mining giant will also work on transforming its business to better use technology. Source
  • Billy Bee and Doyon honey brands shifts to all-Canadian honey in Canada

    Economic CTV News
    TORONTO -- The company that owns the Billy Bee and Doyon honey brands says it will start using only Canadian honey for both products in Canada this year. McCormick & Co. says Billy Bee and Doyon products containing all-Canadian honey will start appearing on store shelves in June, while the Billy Bee organic variety will arrive before the end of the year. Source
  • Wells Fargo board re-elected as management faces protests

    Economic CBC News
    Wells Fargo & Co.'s annual meeting turned raucous when it was repeatedly interrupted by angry shareholders on Tuesday as the bank's chairman and chief executive tried to calm nerves ahead of a vote that could oust the majority of its board. Source
  • Wells Fargo shareholders disrupt meeting as fate of board members awaited

    Economic CBC News
    Wells Fargo & Co.'s annual meeting turned raucous when it was repeatedly interrupted by angry shareholders on Tuesday as the bank's chairman and chief executive tried to calm nerves ahead of a vote that could oust the majority of its board. Source
  • New Ontario rent control rules may prompt some condo owners to sell: report

    Economic CBC News
    New rent control measures unveiled last week by the Ontario government could wind up pushing some small investors out of the condominium market, according to a new report. Urbanation, a research and consulting firm specializing in the Toronto condominium market, said the imposition of rent control by the government on recently built units is the "single biggest and potentially most harmful change" introduced in the government's plan. Source
  • Loonie takes a hit but shares of most lumber companies rise after duties

    Economic CTV News
    Canada-U.S. relationship bigger, more important than any one 'irritant,' says PM U.S. President Trump takes first swing in lumber war Source