Technology

How Technology Eliminates Barriers To Investment Advice

By Nest Wealth on 15/11/2018Article 4 Minute Read

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In almost each of the spaces it interacts with, technology has eliminated barriers for us in some form or another. Even something as simple as the very first writing tool completely changed the way society communicated. Finally, there was a way to pass down information (while keeping its integrity) through generation after generation.

Imagine that! It effectively eliminated the barrier of time and changed the concerns about the delivery of information.

Fast forward to the 21st century, we live and breath the impact of technology the progress its made on us culturally. It’s ingrained in every part of our lives, making daily and routine tasks easier and more convenient. And as a result of the deep integration (pun intended) within our culture, it’s easy to overlook the benefits of said technology.

From the smartphone you use to the car (or bike) you ride right down to the app you’re ordering your family dinners from, these technologies were made to simplify your life. And it’s no different when it comes to managing your money.

How has technology shaped wealth management for investors?

The Canadian investor was historically challenged to choose from structured investment solutions that used traditional ambiguous high-fee investing models. Today, with more digital innovation within the industry, the bar has been raised to meet the needs and wants of the customer and their expectations.

Consumers are seeing more attractive solutions that are challenging convention and are generally more convenient to manage. Like robo-advisors.

Robo-advisors are the driving force behind creating more competitive offerings. That means consumers will have access to an equal level playing field. By offering a similar product to mutual funds with potential for similar (or better) returns, robos are creating a need for all wealth professionals to raise the bar in order to continue to stay relevant.

Enhancing Accessibility

Both from a geographic standpoint and from an overall accessibility perspective, robo-advisors have created a space for all investors to have access to sophisticated wealth. Why? Because you’re not limiting offerings based on geography. Although we do have a head office, we aren’t restricting our outreach based on the location of the client. Our processes are fully digital meaning any investor, regardless of their location, can create an account and get invested.

We also understand there is a growing desire for our customers to have a digital wealth product.

One study reported that a majority (59%) of the wealth clients state that digital will be their preferred channel for receiving advice within the next two to three years. The same study also found that most clients are also familiar with robo advice offerings.1  

Improving Transparency

Working with a third-party to manage your investments can be frustrating at times, mostly because a lot of investors feel like they’re not completely aware of the fees they’re being charged and why. Understanding how much you are paying your wealth advisor doesn’t have to be confusing or lack transparency. And having a professionally managed portfolio doesn’t have to break the bank either. But we get it, sometimes it’s just not that easy to track down the facts.

With many digital wealth advisors (aka robo-advisors), having a platform that gives investors access into their fees and performance inherently enables a culture centered around transparency. Investors have access to see where their money is going in real-time.

But unlike other robo-advisors and digital wealth managers, Nest Wealth doesn’t charge by the account size. Instead, we charge a monthly flat management fee that is capped at $80 a month, no matter how big the account grows. We choose to make all fees as transparent as possible so we break them out for you. We believe Canadians have already spent too much time and money on hidden fees when it comes to their wealth management.

Creating Cost-Effective Solutions

Lastly, robo-advisors are able to offer inexpensive portfolios that give investors access to sophisticated wealth at a fraction of the cost of traditional investments like mutual funds. Canadians pay among the highest fees in the world for mutual fund management. Fees alone average at about 2.23%.

We construct personalized portfolios that are well diversified using ETFs. And with our one low monthly flat fee, our investors are never paying more than $80 a month on management fees regardless of if they’re investing $2 million dollars or $200,000. Other fees, like custodian fees, also apply. You can visit our pricing page for more information.

If you’re curious to learn more about our investment approach, feel free to check out this blog post we wrote about passive investing.

Sources

Source 1:
https://www.ey.com/Publication/vwLUAssets/ey-digital-disruption-in-wealth-management.pdf/$File/ey-digital-disruption-in-wealth-management.pdf

Source 2
As compared to the average Traditional equity Mutual Fund MER of 2.23% per year (MorningStar Global Fund Investor Experience Study, 2017).