Becoming a new Robo-Advisor client may be challenging, Dalbar finds

Robot hand, ordering on a laptop keyboard, an exchange trade. Robot trading system is a computer trading program that automatically submits trades to an exchange without any human interventions. Depth of field with focus on finger.DALBAR has released results for its study of the user experience of North American users of robo-adviser services, dubbed the Robo-advisor Onboarding Experience study.

It found that opening a new account is a critical first point of contact between a service provider and a client.

In this press release, it found that some Canadian robo-advisors are “clearly falling short of peer performance as well as of Canadian investors’ expectations for service in the wealth management space.”

Service gaps identified  

Funding the account was the biggest challenge facing Canadian robo-advisors.
Several firms encountered serious technical and logistical challenges using live chat effectively.

It can take up to 8 steps to complete a new account open with a Canadian robo-advisor.
Almost all robo-advisors did not discuss when portfolios are rebalanced.

Here’s what Anita Lo, Dalbar vice president said:

“The fintech revolution is expected to disrupt the wealth management industry, but we can’t lose sight of who is in the driver’s seat, the client will ultimately decide how much they will embrace this new segment and who they will trust to manage their investments … the stakes are very high, tolerance for errors is low, so developing strong client relationships at the onset will be particularly important.”

Using a case-study approach, DALBAR recruited 45 mystery shoppers across Canada and the US to participate in an investigation of the so-called “on boarding process” by opening a new robo-advisor account. Mystery shops took place between April and June 2016 at ten Canadian robo-advisory firms and five US firms.

Launched in 1976, DALBAR, Inc. is a leading independent expert for evaluating, auditing and rating business practices, customer performance, product quality and service.

Canadian robo-advisers respond

As we receive them, we will append to this blog the response of the major Canadian robo-advisers. They and their users are also welcome to post comments below.

Here is the first response, from Randy Cass, founder of

“At Nest Wealth, our clients can open multiple accounts within minutes and fund them within days. Our clients can reach someone to speak with during business hours, late at night or on the weekends. Every single investor has a conversation with a dedicated portfolio manager and has a chance to ask any question on their mind before any money is invested. And they can do everything I just mentioned from the convenience of their favorite chair in their own home. Investors finally are seeing true innovation and being charged lower fees that will let them keep vastly more of their own money. I fully expect that this is just the start of real change and the truth is there’s probably never been a better time to be a retail investor in Canada.”

From Andrew Kirkland, president of JustWealth:

“We applaud Dalbar for conducting this research. As a young and growing industry, client feedback like this is integral to improving the process for all robo-advisors. We acknowledge that this is early days for the online portfolio management industry, and the technology is still fairly new and changing rapidly.  At Justwealth, our view on the technology for online portfolio managers is that it should enable access, convenience and efficiency of operations, but the technology itself does not enable us to avoid important regulatory requirements such as identity verification or obtaining adequate know-your-client information. Justwealth believes providing a smart, honest and cost-effective investment option is what is in the best interest of Canadian investors, and we remain committed to delivering just that.”

From Wealthsimple:

“Our mission is to make investing accessible to all Canadians, regardless of age or net worth. This mission involves making the signup process as seamless and simple as possible. Historically, financial institutions have put up many barriers to setting up an investment account. We’re very proud of how simple it is to set up an account at Wealthsimple. We will continue to innovate and improve the onboarding experience for our clients.”

From Wealthbar’s Tea Nicola:

I did not read the actual report, but from what I can infer from the press release, one potential flaw may be that they only looked at the robo-adviser onboarding experience.

I would have been interested to see a comparison of digital vs. traditional onboarding. We have received a lot of interest from traditional advisers about how they might leverage our digital onboarding process for their practice.