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BMO first of Big Five banks to offer robo-advisor portfolio manager with SmartFolio

BMOSmartFolio The Bank of Montreal launched its SmartFolio robo-advisor service on Monday, opening its fintech experiment to the wider public after a limited in-house trial run that began on December 7.
Like other robo-advisor services offered by smaller fintech companies, SmartFolio is designed to allow users to access their account and actively manage their portfolio on a mobile device.
Users can sign up for the service with a minimum $5,000 investment, with fees at 0.7% for the first $100,000 and a declining fee as the balance increases.
Prospective clients are asked a series of questions relating to income and risk tolerance before being enrolled in one of five model portfolios composed of one of BMO’s exchange traded funds.
“BMO SmartFolio is another example of how we are innovating to address the evolving needs of our customers,” said BMO Financial Group Head of Personal Wealth Management Joanna Rotenberg. “This new service complements and adds to our existing wealth management digital and retail offerings. With the introduction of BMO SmartFolio, we now have one of the most comprehensive suites of investing services in the industry.”
The move signals a first for Canada’s “Big Five” banks responding to fintech challenges presented by early-stage companies such as Wealthsimple, NestWealth or WealthBar.
Both Wealthsimple and WealthBar allow minimum investments less than $5,000 and offer rates of 0.5% and 0.6% respectively for clients investing more than $5,000.
“We created BMO SmartFolio with simplicity, intuitiveness and transparency as the guiding design principles,” said Charyl Galpin, Head, BMO Nesbitt Burns, part of BMO Wealth Management. “We wanted to make the service as easy to use as possible. For example, when clients are asked for specific information, SmartFolio explains the rationale for why it’s needed. Further, we introduced a digital signature technology that expedites the onboarding process. We also provide clients with multiple options for support, including live chat, phone and e-mail.”
Rather than acquire or adopt a smaller competitor, BMO decided to make SmartFolio from scratch.
But while fintech start-ups represent what might be regarded as a disruption to the established banking power structure, it’s worth keeping in mind that fintech start-ups have attracted a tiny fraction, or “several hundred million dollars”, according to Brett McDonald of Investor Economics talking to Bloomberg, out of a total pie of $3.6 trillion in investable assets in Canada, $1.3 trillion of which were invested in mutual funds as of November 2015.
Wealthsimple alone, which started in September 2014, has attracted 10,000 customers and manages $400 million in client assets.
Even so, anxiety on the banks’ part that they risk losing tech-savvy millennials to small and agile start-ups has at least provoked them into action.

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