May 31, 2023

Case Study: How Bold Wealth Repapered Their Entire Book of Business With Mako Fintech

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Bold Wealth is a GTA-based wealth management firm with a simple mission: a haven for people disappointed by big banks' lacklustre service and fee structure. By offering recurring meetings and high levels of expertise, Bold Wealth is bringing a more personalized approach to wealth management that makes its clients feel more at ease with their finances.

This approach was engineered by Bold to answer a growing shift in client expectations, and it has brought Bold a large and diversified clientele across all age groups. By structuring their business more efficiently, Bold can typically offer a 30 to 50% reduction in fees to most of their new clients. Bold wanted an industry-leading onboarding and data management solution to match their innovative mindset.

KYC and onboarding patchwork solution

Like many other firms, they had pieced together a combination of PDFs, DocuSign workflows and Excel databases over the years. This technology stack served their onboarding and KYCs fine, but it wasn’t much of an upgrade over paper since it still took Bold partners a long time to set up and customize for their clients.

Additionally, they were considering a custodian switch to Aviso, and the task of bulk repapering their entire clientele seemed daunting without a technological solution to assist them.

The search for a KYC partner

As Bold Wealth began its search for a new technical partner; Aviso recommended they speak with Mako, who immediately stood out from the rest. We could help them with their bulk repapering process and provide a fully customizable, low-code KYC automation solution.

Mako also happened to be a much more cost-efficient solution when compared to the quotes Bold received from implementation partners to beef up their DocuSign workflows.

Mako’s implementation process blew away Bold with their speed of requested changes and the constant communication from the team.

Mako executes the fastest bulk repapering process

Over a short period of 4 weeks, Bold Wealth transferred and repapered an entire segment of their accounts, totalling over 300 million dollars to Aviso. Their new custodian was shocked at how fast they were able to achieve this task.

Since its implementation, their staff have found the experience to be much more pleasant than DocuSign. Clients have also mentioned that their onboarding process had been much smoother than they were used to.

The time required to set up KYC and onboarding has been dramatically cut, which has allowed their advisors to do more of what is most important: advise clients.

A better KYC and onboarding process

Since the implementation of Mako, here are the main improvements Bold Wealth has noticed:

Increased searchability and data availability. In fact, Mako’s search is so quick that it has replaced their slower Excel databases.
More convenient and secure storing of the forms and history of information.
A dramatic increase in the speed of workflows.
Stronger user permission capabilities
Improved data quality and reduced NIGOs with built-in business and compliance logic
Easier auditability with clear audit trails and internal commentary

Introducing technology into your firm’s processes can be a daunting task. Chris Arthur from Bold Wealth has straightforward advice in that regard: “Get over your premade conceptions and ask the actual users of the software how they feel. Then start off slow with some internal clients, and test things out one client at a time”.

KYC and onboarding are the heart of any wealth management office. It is a critical set of tasks that is too important to let linger. Contact us today to make yours faster, automatic and error-free.

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Technology and Efficiency in Wealth Management

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So in my view an appropriately diversified portfolio should have enough exposure to different asset classes, that its able to withstand a wide range of market disruptions. Usually, it’s some kind of negative or positive event… they’ll affect different asset classes differently. So by having your eggs in different baskets you’ll be well insulated from major risk. For example, there’s some kind of change in the housing market… both by having some exposure to it, you won’t miss out on the opportunity to make money. But if it’s something negative, you’re also not going to lose all your money if all of it were in the housing market for example. So at a high level, a properly diversified portfolio should grow in a growing market and yet not be at risk of major losses in a declining market.
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You asked also about an efficiently diversified portfolio, and I would say that that’s a portfolio that achieves those goals with a minimum of different positions. There’s a lot of good reasons to have fewer positions in your portfolio. Being less complex means a portfolio is easier to rebalance and administer. Every time part of your portfolio goes up or down, you're going to need to rebalance it a little to make sure that it stays with the right allocations and the fewer positions you have, the easier it is to do that..the less trading fees you incur doing that.
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There is a tradeoff between being completely diversified and being efficiently diversified. If you were completely diversified then you’d have a proportional segment of absolutely everything you could invest in under the sun, like shares of palm oil futures or something like that. I don’t think everyone should have palm oil futures in their portfolio but I’m not a wealth manager. I think it comes down to your portfolio and how large it is (probably the Canada Pension Plan has a proportion of palm oil futures in it). You’re going to have to talk to your advisor and choose a degree of complexity that’s right for your portfolio.
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CN: Let’s just take a step back - what does a typical portfolio look like and has that changed over time?
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RB: Yeah, so I'm not entirely sure what a typical portfolio looks like these days because it's actually changed quite a lot over time. I think common wisdom used to be that the classic balanced portfolio was 60% public stocks and 40% bonds. These days that's ancient history. Most would say that the bond allocation should be a lot lower these days in this age of unprecedented low-interest rates. These days it’s the stock portfolio that’s been driving a lot of the growth. I think a well-diversified portfolio in the modern era should absolutely include exposure to all kinds of alternative assets (that aren't even really that alternative but still kind of fall out of that traditional bucket). So you know I mentioned real estate, private companies, maybe for example commodities or other types of investments. So I think that there are a lot of things that you can invest in and your advisor can guide you on what’s appropriate for you.
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CN: Yeah that makes a lot of sense. Talking about alternative investments, we’ve heard a lot this year about ESGs, impact investing, alternative investments… do you think there’s more of an appetite today for these types of investments than in the last ten years?
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RB: Yeah that’s a topic that’s close to my heart having previously started an impact investment company. It’s definitely been a gigantic increase in interest. I think when I started my previous company we were speaking to large wealth managers and having them say “we’re barely getting a grip on early ideas.” Like not including gun manufacturers or tobacco companies, and now these same companies are launching impact portfolios and marketing this aggressively. So there’s definitely been a seat change, it’s a real industry, and there’s a lot of studies out there and data showing that ESG or impact investing can equal or outperform non-impact investments. So I think it’s a huge part of the market these days. That said, one of the things that’s driving it is people’s interest in it. I think that one of the stories of the investment industry has been the personalization of it. People’s portfolios are being tailored to their own needs and circumstances. Impact investing is definitely a piece of that. People are environmentalists, but an institution is not an environmentalist. It doesn’t live and breathe the impact on the environment the way an individual does. The person who is active in the David Suzuki Foundation for example is going to be active as an impact investor and it’s appropriate for them to be.

In Pursuit of Efficiency:

Working with Technology to De-paper Wealth Management Processes

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That’s a great question. I think there's a lot of advantages and you gain a lot with an automated platform. For me, it's a lot easier to manage. I have some of my money in one of these platforms and I barely think about it. It's being rebalanced all the time. The costs are much lower in terms of expense ratio for the same kind of rebalancing. Again you're missing a lot with that, but on just the mechanical portfolio rebalancing you're getting a great deal there. I would say that two other advantages are up-to-the-minute reporting, so you always have that login where you can see your position, see how your portfolio is doing historically. And finally, this is an advantage for me and anyone who doesn't love doing taxes, but typically they’ll take care of your tax forms for you, and end up with much simpler tax forms, so it kind of works out what your cost basis was and how much you have to report.
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CN: So let's talk about the other side of the coin then...what are the risks of not having a seasoned professional managing your money?
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RB: I wouldn’t exactly phrase the question that way. You know it's more what’s the benefits of having a real wealth manager? Some of the clients of robo advisory firms may not even be aware that they're missing out. A wealth manager isn't just balancing your stocks and bonds, that's kind of the very lowest mechanical level of what you get out of the wealth manager. Really they're your advisor on your life. Intimately intertwined with you because you're thinking about retirement planning, on planning for college for your kids, when is the right time to buy a house, and when should you get life insurance, for example. An advisor can help you with all of those decisions and they can connect you with service providers like a mortgage broker when you may be in need of one. So I think that you get a lot of value out of having one of these advisers, particularly when you get to a stage in life when these kinds of services are more about the long-term and your life circumstances are far more critical.
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CN: There are clearly pros and cons and two sides of the story depending on who you're asking. Like you said, what stage of their life they’re in ...but do you think the platforms that we’re seeing emerging like to Qtrade, Wealthsimple, and all the rest will ever become status quo?
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RB: Yeah, I do actually. I think that similarly to how you know we’re using online platforms to automate everything for us (I can’t think of the last time I used to travel for example), everything you’re going to be trying to do with your money is going to be automated, and it’s going to be appropriate to be handled by one of these one of these platforms. In particular, for most people at an early stage in their lives that have few assets to manage, not a lot of complexity, not a very extended personal family circumstance, it’s gonna make a lot of sense to have a low fee robo worry about it. But at some point their life circumstances are going to get more complex and you’re gonna get married, or maybe you’re not, or you may have other objectives that you may want some advice on and at that point it may make sense to either supplement the robo advisory portion of your portfolio, or graduate to a more holistic wealth management view.
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CN: Thank you so much Raph, these answers were great. It’s always insightful chatting with you so thanks for sharing those answers with us today.
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RB: It’s my pleasure.

Mako Fintech Team

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