“This is even though they are doing the investing themselves and find all kinds of research,” says Jamie Golombek, managing director, tax and estate planning, at CIBC Wealth Advisory Services. Here’s the problem. Traditional financial advisers oſten have account minimums that many millennials can’t meet, but do-it- yourself investing doesn’t offer the advice millennials crave. Thankfully, this is one area in which financial institutions are starting to comprehend the needs of millennials, with the advent of robo-advisers, which marry professional advice with a DIY element. O’Connor uses a robo-adviser service — an app from online
portfolio manager Wealthsimple — which essentially provides a computerized financial plan. Here’s how it works. First, he filled out a detailed questionnaire to determine his risk tolerance. Then the robo-adviser helped him choose a portfolio from one of 10 predetermined plans that best suited his situation. Finally, an algorithm automatically rebalances and reinvests the invest- ments on his behalf. If he has any concerns or issues, he can get a response by email, text or phone on a 24/7 basis. O’Connor appreciates the flexibility, low cost and transparency
of the advice. “It has a really easy on-boarding process,” he says. “I like the financial strategies they put together for people. You put the money in and leave it alone for the time being. And I don’t have to walk in with $20,000 or $100,000 to feel relevant. I can contribute small amounts.” Globally, robo-advisers, which are mostly independent players
at this stage, had US$20 billion in assets by the end of 2015. That number is expected to balloon to US$450 billion by 2020, accord- ing to MyPrivateBanking research. In January, the Bank of Montreal was the first of the big five
Canadian banks to make its own robo-adviser available to inves- tors. Other banks are expected to follow suit. O’Connor thinks the move is a step in the right direction to woo millennials, and predicts BMO’s platform will likely be “a little more expensive [than independent robo-advisers] and a little less convenient, but under a more trusted brand.” And trust is what it all comes down to, even for millennials.
They may have a higher-than-average switching rate when it comes to banks, but this is still a conservative country. Drilling down a bit deeper into Accenture’s numbers, consider this. While 37% of Mexican customers surveyed switched banks in the past year, just 7% of Canadian customers did. That’s not to say that change won’t happen — it definitely will — but the pace will be more methodical and gradual. Great news for the banks that are busy playing catch-up. And many unanswered questions remain as millennials grow
older. “We don’t know what happens when life events do happen to them, and how that will change [their decisions] over their lifetime,” Wallis says. “We don’t know yet if there is truly a behav- ioural shiſt and a reluctance to take on debt or just a delayed set of financial needs.”
right-hand page ad positioningDEANNE GAGE is a freelance writer based in Toronto
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Culutre_Ad_Mar16.indd 1 MARCH 2016 | CPA MAGAZINE | 45 2016-01-20 8:51 AM
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