It’s highly unusual to link a mutual fund provider with a Robo advisory platform. In fact, it seems like an oxymoron to equate mutual funds (often associated with high fees) with Robo investing (whose very aim is to promote low-fee investing), nut that’s exactly what one of Canada’s leading mutual fund companies: Invesco Canada Ltd, has done – but with a slight twist!
A Robo For The Pro
YoungandThrifty’s Complete Guide to Canada’s Robo Advisors has extensively covered the Canadian Robo Advisory landscape. In 2012, there were just a handful of Robo advisors out there. Today, the Canadian Robo-sphere has over 15 registered Robo platforms servicing the needs of the investment community. Most of these platforms are retail investor-specific (see our Wealthsimple Review, BMO Smartfolio Review, ModernAdvisor Review, Nest Wealth Review, Just Wealth Review, and Wealthbar Review for more details) – and that’s where Invesco Canada stands out from its peers.
Launched late last year (November 22nd, 2017), Invesco’s advisorDUO Robo platform targets the professional advisor, as opposed to retail investors. Like the challenges that other Robo platforms address for retail investors, advisorDUO seeks to assist professional money managers in streamlining their practices and client relationships.
While Invesco entered the Robo Advisory business in the U.S. in 2016, by acquiring Jemstep, advisorDUO is the company’s effort to bring similar fintech capabilities to the Canadian financial services industry. Unlike other Robo platforms however, the advisorDUO platform is exclusively offered to licensed advisors and dealers (Professional Advisors). The platform does not offer a direct-to-consumer option.
If you are an investor looking to manage your investment accounts yourself (a Retail investor), advisorDUO is not what you are looking for. You’d be better served by other retail-oriented platforms such as Wealthsimple or BMO SmartFolio, which are ideal for the every-day DIY investor.
What Invesco advisorDUO Offers Advisors
Invesco is certainly a powerhouse when it comes to managing money. With over $40-billion in assets under its management, it was amongst the first mutual-fund providers to enter into ETFs back in 2009. Since then, it’s PowerShares range of ETFs has amassed over $8.6 billion (as of Oct 31, 2017) in assets.
With that much weight behind it, it was only natural for Invesco to take the next step and enter into the digital wealth-management arena – which is what they did with advisorDUO.
So, what exactly is advisorDUO, and what does it offer? Here are the highlights of what’s on offer:
- advisorDUO is an automated platform from Invesco, which is primarily open to licensed advisors who are members of the Mutual Fund Dealers Association of Canada (MFDA)
- It is designed to assist dealers to digitally transform and streamline the on-boarding process for new clients – a process that’s currently time consuming and cumbersome
- With the new tool in place, advisors can eliminate a lot of paperwork that’s often the hallmark of opening new investment accounts
- advisorDUO is uniquely configurable for each advisor, and can be integrated with current systems and platforms that serve existing clients
- The tool offers professional advisors a choice of 5 recommended portfolios designed to fit a diverse range of client needs – Conservative Portfolio, Moderate Portfolio, Balanced Portfolio, Growth Portfolio, and High Growth Portfolio
- The portfolios are created using Invesco’s highly successful “fund of funds” strategy, which it has been following since 2009. Being primarily a Mutual fund provider, the five Invesco portfolios comprise of ETFs that have been wrapped around a Mutual Fund
Just because advisorDUO is classified as a “Robo” platform, does not mean it minimizes the human element. These portfolios are often managed by multiple (human) managers, and may also include 3rd-party ETF products from leading providers like Vanguard, iShares and Blackrock.
Many digital platforms require dealers to sign referral agreements that, in effect, take client assets “off book”. This leaves the platform owner in control of client assets, leaving dealers with little or no say in the relationship thereafter. A key differentiator of advisorDUO, versus other digital platforms on offer to professional dealers, is that the end-client still maintains their relationship with the advisory dealer.
So, what’s the most compelling value proposition for the pros to get on board with advisorDUO?
Well, the onboarding process discussed above, and the streamlining of portfolio selection is definitely something that professional advisors should value. However, there are many advisors and Mutual Fund dealers out there who, for either statutory or internal operational reasons, cannot trade ETFs. With a platform like advisorDUO, some of those barriers are lifted.
Another very critical aspect for advisors, that advisorDUO seeks to address, is that of compliance. The tool guides advisors through the entire process of portfolio construction, using ETFs as a building-block, but also ensures that decisions are fully compliant with regulatory guidelines. Advisors unfamiliar with ETFs will find this feature of great value.
advisorDUO acts as a central platform and digital wealth-management hub for the professional advisor. Other significant features that come with advisorDUO include:
- The ability to automate (and integrate) the process of onboarding a client, with the industry required “Know Your Client” process, using mobile devices such as the clients’ tablet, smartphone or laptop
- Depending on how comfortable clients feel about online on-boarding, advisorDUO also allows clients to walk into their advisor’s office and complete the on-boarding process
- advisorDUO enables clients of the advisor to leverage this digital platform to access and fill out an electronic Goal-seeking questionnaire, on their own time, so that the information provided feeds into advisorDUO’s portfolio recommendations
- One neat feature about advisorDUO is that, even though it makes portfolio recommendations, the advisor doesn’t entirely relegate advisory control to the “Robo”. Professionals can still get involved and assign appropriate percentages to the asset mix for the overall portfolio
- As a digital wealth-management “hub”, advisorDUO has access to digital versions of all fund-related documentation, including the latest copies of Fund Facts. All of this information can be transmitted to the end client electronically, and then signed and returned in kind back via the advisorDUO platform
advisorDUO also gives smaller independent dealers the opportunity to offer lower-fee ETF-based portfolios to their clients. Fees for advisorDUO-recommended portfolios range from 0.41% to 0.51%, with fees from 1.41% to 1.51% for Advisor Series funds.
Retail clients, establishing a relationship with professional advisors using advisorDUO, must be aware that it is primarily a fee-based platform. However, because the building-blocks for advisorDUO’s portfolios use the Fund-of-Funds approach, there may be embedded trailer fees associated too.
Why Make The Switch
The financial advisory business is a very competitive space. Traditional ways of doing business just won’t cut it anymore. Both end-clients and professional advisors are looking for ways to enhance their relationship, while at the same time expediting and streamlining age-old processes associated within the industry.
Advisors, who are looking to jump-start their way into digital wealth-management, will find advisorDUO an excellent white-label tool to do just that. Making the switch to advisorDUO will not only reduce a lot of administrative overhead associated with client relationship management, but it will offer a broader range of value-added products and services to an advisory practice.