Robo Advisors A Touch More Human In Canada

December 29, 2016 Here in the U.S., there's a big home bias. Most investors here in the U.S. don't have much beyond the U.S. borders in terms of emerging markets or any of that. Is there that same kind of home bias there in Canada?

Joanes: Yes. Canada also experiences high home bias. Canada makes up, let's say, 4% of the global equity market, yet 60% of equities in a client's portfolio are Canadian.

So where you have large countries like the U.S., with large diversified markets, the implications of home bias can be small. However, in Canada, where equity markets are concentrated securities in sectors such as resources and financials, the impacts can be significant.

So we at WealthBar have low Canadian equity exposure in the portfolio. At the same time, we have to remain cognizant of our clients' expectations and eventual withdrawals being in Canada in Canadian dollars. Do you offer any kind of services toward advisors in terms of your robo offering?

Joanes: We’ll be rolling out services towards advisors in Q1 of 2017. Are we getting to the point that if you're an advisor and you don't have some kind of robo offering, you're too 20th century; you're not going to be able to sustain any kind of future growth. Or is that overdramatic?

Joanes: I think at the moment it's overdramatic. But what advisors should be prepared to do and be aware of is that clients are doing everything online today. So they need to have some way to interact with their client that gives their clients convenience and accessibility without the client needing to come in to the office for discussion or pick up the phone.

I don’t think that the robo-advisor space is going to destroy the traditional financial advisor. What I do think is that the technologies we use and the type of interactions with which we engage with our clients will be integrated into traditional practices.

We’re working on solutions for advisors. And then advisors will pick and choose what works best for them and their clients. Some clients prefer not to do anything online and to deal with an individual person.

But I do think that if advisors ignore the technology, their clients could suffer and their growth could suffer. But I don't think it’ll destroy their business if they don't jump into it right now.

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