Don’t call us robo-advisers, we deliver “light advice”

Cute Robot

Lots of ink for so-called robo-advisers in the press lately. With the unveiling of several new start-ups north of the border, this is a trend that won’t be stopping any time soon. One of the first pieces on it of which I’m aware was in the June 2014 issue of MoneySense, bearing the headline “Subscription-based Couch Potato.” I should know, since I wrote both the article and the headline.

Late in August, I wrote a piece on this for the Financial Post, and tried to make the case that “light advice” might be a better term since human advisers can and often do get involved in the process. “Light” suggests a half-way point between the “no advice” model of discount broker enthusiasts choosing their own ETFs, and the “full” advice model of full-commission stock brokers or investment counsellors or wrap programs that give plenty of human oversight, but also charge for it one way or another.

Dan Bortolotti of Canadian Couch Potato and PWL Capital also devoted his Index Investor column to robo-advisers in the fall issue of MoneySense. Dan sees plenty of benefits to them, one of them being lower investment costs, but another is that he believes they’ll force investment advisers (humans, that is) to do a better job.

Rob Carrick of the Globe has also weighed in as have, no doubt, a multitude of other personal finance writers and bloggers. In this September piece, Rob wrote that robo-advisers have arrived and “may be just what your portfolio needs.”

The past weekend, David Pett of the Financial Post wrote a good piece on the topic, with full portfolios generated for younger investors and retirees by four of the major Canadian robo-adviser — sorry, I meant light advice — firms.

And finally I wrote a piece on this today (Nov. 14) for the Investor Education Fund’s Getting Smarter About Money site.

I’d like to hear from new users of this model

I’ll certainly be doing more on this topic and would like to hear from readers who have actually used them. As a relatively new service, these early adopters presumably come from one of three camps: brand new money from those starting out in investing; those migrating “down” from higher-cost full-service brokerage, mutual funds, wrap programs or investment counsellors; and those migrating “up” from no-advice rock-bottom costs of choosing their own securities at a discount brokerage.

Presumably in the latter case, the investors have concluded they have done their portfolios a disservice by picking their own stocks, ETFs or sectors: I used to joke about “self-wrecked RRSPs.” For them, moving from no advice at all to “light” advice may be a compromise whereby they’re now willing to give up 1% or so in annual costs in return for some relative peace of mind about the big-picture topics of asset allocation, geographical and sector concentration, and rebalancing.

I’d welcome hearing from investors from any of these categories, although I doubt much new money has gone into these services yet. That may happen though, as lottery winners and those selling their businesses look for a home for a sudden infusion of cash.

If and when we get our commenting capability and discussion forums rolling, that would be one place to give us feedback. In the meantime, I welcome hearing the investor perspective from all three of the camps just mentioned: just email me at or @me at Twitter.

P.S. Have heard from several clients of Wealth Simple. How about clients from some of the other firms?

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