Bank of Montreal Launches “Robo-Adviser” Services

  • By: mvadmin
  • Date: January 5, 2018
  • Time to read: 2 min.

The Bank of Montreal Became the First of the Big Five Canadian Banks to Launch The “Robo-Adviser”, an Online Portfolio Manager.

A robo-advisor is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners.

The service, which is named SmartFolio, is now available to all investors after a trial run. Bank of Montreal opted to build the product in house rather than partner with a financial technology firm.

Other large Canadian banks too have hinted that they would enter the online investment advice business.

This launch is in the wake of concerns that banks could lose market share if young customers ditch traditional banking services for finance startups that offer low cost online investment management.

Bank of Montreal’s brand gives it an advantage over startups providing similar services, Joanna Rotenberg, head of personal wealth management said.

“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, So we’re really bringing together the best of both worlds” Rotenberg added.

Clients who don’t have enough assets to warrant hiring an investment advisor have only few options beside mutual funds. Robo-advisers aim to fill that gap in the marketplace by providing a cost effective investment option for such clients.

While the new service can be used by anyone, it was created for millennials as they prefer online transactions and may have only limited investment knowledge.

Bank of Montreal said it used clear, jargon free language and a simple responsive website design which would provide users the same experience regardless of whether it was accessed through a Smartphone, Tablet or a Computer

Signing up for the services is easy. Clients first fill up an online questionnaire that includes information about investment goals, time horizon and their tolerance for risk.

Other questions include annual income, net worth and how much loss they can bear. The client is then enrolled in one of the five model portfolios made up of Bank of Montreal’s own exchange-traded funds.

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 a $5,000 account, the annual fee comes out to $60, according to an online calculator featured on the SmartFolio site.

However, the services charges appear higher than some of the startups in the business such as WealthSimple and WealthBar.

The Bank of Montreal also added that though named ‘robo-adviser”, 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.