Here’s my latest MoneySense blog, which recaps the two-day Exchange Traded Forum 2016 in Toronto this week.
You can find the full blog by clicking on this headline: Are ETFs beating out mutual funds in popularity?
Pictured to the left is Dave Nadig, ETF director for FactSet Research Systems Inc. of Norwalk, CT, who in his keynote address said that since the financial crisis, net mutual fund inflows were US$61 billion, compared to a whopping US$1.2 trillion for ETFs.
Hockey stick curve
My latest Financial Post blog reports on the Radius Exchange Traded Forum 2016 conference that began on Tuesday and continues Wednesday at the Design Exchange in Toronto.
You can find the full blog by clicking on this highlighted headline: Robo Advisers and ETFs prove it’s time for a new financial advice fee structure.
That model, described before here at the Hub, consists of taking advantage of the scaling possibilities of so-called “fin tech” (financial technology) like robo advisers and the underlying ETF structures, and moving from an asset-based model based on a percentage of client wealth, and moving to a Netflix-like monthly subscription model.
Needless to say, not everyone in the established financial industry is thrilled by that prospect. To quote one of the experts cited, “Index funds are like garlic to vampires for Wall Street.”
By Robb Engen, Boomer & Echo
Special to the Financial Independence Hub
Young readers often ask for investing tips and wonder how to get started. My typical response is that once you have a good handle on your finances – no credit-card debt, student loans fully paid (or close to it), some cash saved up for emergencies, short-term goals are funded (or on the way) – then it’s probably a good time to start your investing journey.
Finding the right investing approach can be tricky for beginners. There are plenty of options available, from GICs and bonds to mutual funds, stocks and ETFs. Then you need to consider your age and risk tolerance. Do you have the stomach to handle stock market fluctuations of 25 per cent or more, or would you prefer to see returns that are lower, yet less volatile?
If you’re serious about saving for retirement, you need an investing guide. Here are a few ideas to get you started:
First time investors: Building your portfolio
The latest FWB TV video is now available here at Findependence.TV and at FWB Securities.com: If you’re not a Robo client then perhaps a Robo-Advisor is not for you.
Robo-Advice is automated portfolio management with minimal human interaction. As the video points out, the growing popularity of robo advisors have made them one of the biggest developments in investing in recent years: they’re easy, simple and cost effective, which makes them especially appealing to younger investors.
In the 4-minute video, host Robin Powell interviews a robo-skeptic: Neil Bage of UK-based Suitable Strategies. He says investing involves a lot more than just filling out questionnaires and doing math and is concerned that if the human advice element is not present, investors may suffer if they miss out on the “seeing the whites of the eyes” type of face-to-face conversations about risk and risk tolerance.
(Mind you, American robo services are more likely NOT to have a human advice component; most robo services in Canada tend to offer at least some human interaction to complement the automated online component.) Continue Reading…
Jon Chevreau: Most robo advisers in North America seem to use a model of charging a fee based on assets. As one of Canada’s original robo-adviser services, NestWealth.com uses a quite different model, based on subscriptions, correct? One, I might add, that you say is also unique in all of North America?
Randy Cass: Nest Wealth’s members pay a flat monthly price for access to a customized portfolio and a dedicated portfolio manager. Our subscription model doesn’t incentivize or commission sales people based on how much of a product they sell. We’re enabling Canadians to sidestep high fees and outdated banking practices that take a percentage of everything they invest throughout their lives.
Nest Wealth’s subscriber community understands that our subscription service fundamentally challenges the model banks, and even newer robo-advisors, have used to charge investors. Not only are we able to deliver a proven investment service capable of saving Canadians up to half of their potential wealth, but we’re continuously improving that service by listening and adapting to our members’ needs. This is a transformational advantage of the subscription model, and it’s one important reason why we see so many industries adopting it as a revenue model.
JC: Is this unique, both in Canada and the US and rest of world?
RC: Nest Wealth is the first and only subscription-based investing service that handles everything from end to end. Investors of all ages can subscribe to our service for $20 a month — less than the cost of a gym membership. And their subscription is capped at $80 no matter how much their assets grow overtime. We want to help Canadians do the math and recognize that our low, flat subscription payment can leave them with 100 per cent more savings than a traditional fee structure that charges based on assets.
The good news is we’re witnessing a clear shift in how Canadians want to pay for and access financial services. A new report by business consultancy EY says that the adoption of fintech services among Canadians will triple over the next 12 months. The report also shows that although consumers trust technology, they still lack awareness of its benefits. We are passionately committed to helping consumers understand and seek out a better way to build wealth. Broader awareness and education will lead to more informed choices about how families plan for their future. There’s quite a bit at stake here.
JC: Where did you get the idea in the first place?
RC: The ‘Aha’ moment came when I was watching Netflix with my youngest son and I recognized that the principles of subscription services like Netflix, Spotify, Salesforce and Zipcar were much more in line with how investors needed to be treated than the status quo.
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