Who wins when advice goes virtual?

A Canadian perspective on digital investment advice

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Over the last several years, the global wealth management industry has been disrupted by the increasing pace of digital innovation, and the Canadian market is no exception.

Amidst the emergence of digital advice, the most recent disruption is taking the form of “robo-advisors”. Firms offering this type of service present a compelling low-fee offering to mass market clients, with continuous monitoring, automated rebalancing and transparency in the investment process.

EY’s report, Advice goes virtual: how new digital investment services are changing the wealth management landscape, examines how these new digital entrants compare to the traditional, face-to-face advice model. This companion piece looks at the new players in the Canadian market, and examines ways in which traditional firms, whether they view these developments as an opportunity or a challenge, can react to the new digital reality by deploying existing channels and infrastructure as a competitive advantage.

Bay Street strikes back

Since the spring of 2014, a wave of new players has entered the digital advice space in Canada. (See Exhibit A.) This rapid pace of innovation is rare in the Canadian industry, and it has caught the attention of Canada’s largest financial institutions. In response, the Big 6 have announced their intentions around digital strategies. Unlike the new entrants, who are unencumbered by existing channels and legacy technology, traditional firms need to carefully navigate between their existing interests and their need to respond to the competition.

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