Did you know that November is Financial Literacy Month in Canada? This year, we’re taking the stage to talk about wealth management in Canada, portfolio diversification, human versus machine investing, and how advisors can build trust with new investors. As a young fintech startup, we at Mako think it’s crucial that advisors and investors have access to technology to make their lives easier, improve their experience, and help them feel confident amidst the rapidly changing financial and technology landscape. What does it mean to build confidence and improve literacy with finances? It means untangling complex topics and explaining them with as little jargon as possible. This year, we're celebrating financial literacy month by talking about some of the hottest topics facing wealth professionals and investors today.
Canada’s wealth is growing. There is more money, more investors, more opportunities, and more wealth management professionals working to pull it all together than ever before. We set out to summarize the state of wealth management in Canada, by featuring some key statistics shared in our video below:
Hi my name is Chandal, and I'm the VP of Marketing and Communications here at Mako Fintech. As part of Financial Literacy Month, we’re asking: What is the current state of wealth management in Canada? To answer this question we’re gonna review 8 key statistics, so let’s get started.
I’m Chandal on behalf of Mako Fintech wishing you wealth in 2022 and beyond. Thanks for watching!
Sources included in this section:
There’s no such thing as a perfect portfolio. In fact, the investment products included in any given portfolio is a very personal decision-making process. A diversified portfolio means that investors have access to a variety of investment products, effectively strengthening their ability to generate a return by not being too dependant on one investing strategy/product or another. There’s a lot to consider to create an effective portfolio, and those considerations can change depending on who you’re talking to. These days many are investing for more than a return, and there's been a rise in interest around impact investing, ESGs and more. We sat down with our President and CEO, Raphael Bouskila, to discuss effective portfolio diversification. Listen to the audio interview or check out the full transcript below:
CN: This is Chandal Nolasco da Silva on behalf of Mako Fintech and I'm speaking with our president and CEO, Raphael Bouskila. We’re going to be talking about portfolio diversification as part of financial literacy month in Canada and we'll cover three questions together, so let’s get started. Okay Raph, question 1, in your opinion what do you think it means to have an effectively and efficiently diversified portfolio?
RB: Thanks Chandal, I appreciate it. So I'm not a wealth manager. I've been an investment dealer before, and I've been chief compliance officer, so I had to learn the answers to these questions. And obviously I have my own money [invested], and I work with a lot of wealth managers, but you know all these answers are kind of disclaimed by the fact that I'm not a professional wealth manager.
If you want to learn more about ESGs we came across this helpful soundbite interview from Investment Executive, or you can check out Wealth Management Canada’s complete guide to ESG here.
Would you trust an algorithm with your money? Millions already do with consumer-first digital platforms like Wealth Simple, QTrade and more. The investing landscape has become very dynamic and EY captures the current state of affairs well here:
“Wealth and asset managers are experiencing a time of exponential change. FinTech disruptors continue to shift the rules, newer investors aren’t flocking to older channels and cost pressure is relentless. From data and AI, to tech platforms and partners, the questions have never been bigger, and the stakes have never been higher.”
To understand the pros and cons of algorithmic platforms versus working with an experienced financial professional, we sat down with Raphael Bouskila, Mako’s President and CEO. Listen to the audio interview or check out the full transcript below:
CN: In this segment, we’re talking about human vs. machine investing, which is a topic that's near and dear to our hearts. So we're going to be asking three questions under this topic and Raph I can't wait to hear your answers. Okay so question 1, what are the advantages of online and algorithmic platforms that take care of investing for you?
RB: Hi Chandal, thanks for taking the time again. I appreciate it. We're not in the robo advisory space ourselves. We have many clients at Mako who we help them with our technology to get better and more efficient, so know we know a little about the topic. Myself being a client to some of these firms, I have some personal experience, but just giving a bit of a disclaimer to my answers here in this segment.
As new ways of investing and new types of technology emerge, advisors are trying to keep up with the preferences of new investors. We define “new” as the all-encompassing description of young, millennial, and/or Gen Z investors - a demographic that prefers frictionless technology experiences. Advisors who are trying to attract this type of investor should think about the experience they’re offering, and how they’re going to build trust with this new generation. We turned to our community of advisors to get insights on how to earn the trust of new investors. To kick it off let's hear from Sébastien St-Hilaire, voted as one of Canada's top wealth advisors in 2021:
“If you want to gain trust with new and younger investors, you need to pay attention to these 3 things from my perspective:
Go the extra mile. New investors may not have the financial knowledge or the financial maturity to avoid the pitfalls of investing. On the other hand, they know how to inform themselves, they are techno-savvy and have an infinite amount of information allowing them to do their own financial education. The place where advisers need to stand out is to go the extra mile when the time is right. Where the internet, the machine or the robot cannot compete with you. The time will come when you have to make a difference in the financial life of the new investor. If you miss your chance, it will be a missed date and a farewell.
Transparency and Stewardship. Likewise, investors have access to almost all information to understand and validate the facts and arguments of investment advisers. You have to be able to have an open-card game with new investors. Knowing your product is essential to our job, but explaining the product transparently to the customer is the most important. It goes a lot further than explaining the fees. You need to be able to explain what the investment portfolio will include and the reasons for including or choosing your companies in the portfolio. The agency theory is outdated for the new investor. They want to know what environmental and social impacts companies have on their community. Making money is great, but being also good is awesome.
Legitimacy. Basically, if you want to be able to gain the confidence of new investors, you have to be able to understand them and know their challenges, fears and ambitions. You can't help yourself if you can’t stay young in your head, maintain strong ties and a presence with this community. If you do stay young and maintain relations with them, you will gain the respect and legitimacy to gain their trust. The experienced financial adviser will never gain the trust of new investors if he enters into a dynamic of power or force. You have to enter into an equal relationship with the new investor.”
“In my experience, the most important factors in building trust with new investors is being authentic and transparent in your communication. There's an overabundance of information at the disposal of investors these days, so setting yourself apart and connecting with clients requires clear, genuine, and concise messaging.”
“New investors may not know what to expect from an advisor or they may be hesitant about the potential risks of investing. It is important to have a transparent discussion of an investor’s situation and goals, as this will help advisors to provide meaningful suggestions and identify areas of uncertainty. Take the time to discuss concerns and explain any of the areas that an investor is unsure about, which could include the relationship the investor will have with an advisor or firm, industry standards we follow, what resources are available, why we collect certain information, the securities being investing in, features of accounts being opened, or potential tax implications of decisions.”
We don't know Tony, but we thought this quote about technology was perfect to conclude our section about how advisors can build trust with new investors. From his article in Forbes, Tony says:
“(...) many neobanks are looking to scale quickly and gain as many customers as possible in the shortest amount of time. New technologies — artificial intelligence, machine learning and behavior and transaction monitoring — are avenues for building trust and fighting fraud.”
Image Credits
Feature Image: Unsplash/Towfiqu barbhuiya
Chandal is Mako's VP of Marketing & Communications. She is a dedicated leader who has spent a decade creating recognized B2B SaaS content marketing and SEO campaigns.
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