BMO is first of Canada's big banks in 'robo-adviser' business with 'SmartFolio'

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

  • Asian shares drop amid worries over U.S.-China trade

    Economic CTV News
    TOKYO - Asian indexes were mostly lower on Wednesday as investors shifted their attention to uncertainties over a planned U.S.-North Korea summit after the perk from eased U.S.-China trade tensions faded. KEEPING SCORE: Japan's benchmark Nikkei 225 dipped 1.3 per cent to 22,661.88, while Australia's S&P/ASX 200 inched down nearly 0.2 per cent at 6,031.40 in early trading. Source
  • Toronto Millennials dream of backyards but are stuck in condos: report

    Economic CTV News
    Toronto Millennials are the most educated group in Canada, but high housing costs are keeping some of the country’s most qualified workers in their parents’ basements or pushing them out of the province altogether, a new report suggests. Source
  • Facebook's Mark Zuckerberg apologizes to EU lawmakers over data leak

    Economic CBC News
    Facebook boss Mark Zuckerberg apologized to European Union lawmakers on Tuesday for a massive data leak, in his latest attempt to draw a line under a scandal that has rocked the world's biggest social media network. Source
  • What your kids should know about money in kindergarten, grade school and high school

    Economic CTV News
    Too many Canadians are reaching adulthood without the skills to successfully manage their financial futures, according to personal finance coach David Lester. The best way he sees to build that knowledge is for parents to start schooling their kids about money as early as possible. Source
  • The New York Stock Exchange just named its first female president in its 226-year history

    Economic CBC News
    The New York Stock Exchange for the first time in its 226-year history will be led by a woman. Stacey Cunningham, who started her career as a floor clerk on the NYSE trading floor, will become the 67th president of the Big Board. Source
  • New York Stock Exchange just named the 1st female president in its 226-year history

    Economic CBC News
    The New York Stock Exchange for the first time in its 226-year history will be led by a woman. Stacey Cunningham, who started her career as a floor clerk on the NYSE trading floor, will become the 67th president of the Big Board. Source
  • Ex-Valeant, Philidor executives convicted of kickback scheme

    Economic CBC News
    A former Valeant Pharmaceuticals International Inc executive and the former chief of mail order pharmacy Philidor Rx Services were found guilty on Tuesday of defrauding Valeant through a multimillion-dollar kickback scheme. The verdict, handed up by a jury in Manhattan federal court, comes on the heels of Valeant's announcement that it will change its name to Bausch Health Companies Inc as it seeks to distance itself from a series of scandals under its previous management. Source
  • Women cite 'grass ceiling' in male-dominated weed industry

    Economic CTV News
    JUNEAU, Alaska -- When Danielle Schumacher attended her first convention of marijuana activists about 15 years ago, she could count on one hand all the women in a room of older men. The lack of diversity struck the then-college student, who remembers feeling out of place but also determined to make her mark. Source
  • Airlines caving to Beijing despite White House protest

    Economic CTV News
    SHANGHAI -- Global airlines are obeying Beijing's demands to refer to Taiwan explicitly as a part of China, despite the White House's call this month to stand firm against such "Orwellian nonsense." The Associated Press found 20 carriers, including Air Canada, British Airways and Lufthansa, that now refer to Taiwan, the self-ruled island that Beijing considers Chinese territory, as a part of China on their global websites. Source
  • McDonald's workers in U.S. file sex harassment claims

    Economic CTV News
    NEW YORK -- Energized by the #MeToo movement, two national advocacy groups are teaming up to lodge sexual harassment complaints against McDonald's on behalf of 10 women who have worked at the fast food restaurant in nine cities. Source