Toronto-based PhilanthPro Solutions launched new financial planning software designed to help donors plan their giving.

Founded by Nicholas Palahnuk, investment advisor and senior portfolio manager with the Palahnuk Group at BMO Nesbitt Burns in Toronto, PhilanthPro helps financial advisors create and manage goals-based financial plans for charitable accounts.

“It’s crazy that we don’t have tools to help people give their money away,” said Palahnuk, who is also CEO of PhilanthPro. “Our whole industry is set up to help people to accumulate wealth.”

Palahnuk has been an advisor for over 12 years with BMO Nesbitt Burns and has primarily helped clients accumulate wealth, but he discovered the pain of not having financial planning software for giving money away when he founded his own charitable foundation.

“We can kind of force these things into traditional planning software, but it’s not ideal. The taxes are wrong, it doesn’t account for grant planning . . . and it’s not easy to use,” he said.

PhilanthPro’s features include a grant planning tool to help donors keep track of grant commitments, a governance and records portal, and a charitable relationship management system. Advisors can create hypothetical scenarios, for example, to show how a large one-off deposit or donation would affect future giving.

PhilanthPro collaborated with accounting firm Grant Thornton LLP to ensure that the CRA-required minimum distribution of funds is accurately modeled for grant planning. In addition to showing minimal distribution over a time horizon, PhilanthPro can also calculate optimal distribution and perpetuity scenarios. The software will automatically update when CRA rules change, Palahnuk said.

After spending a year performing user testing with advisors and philanthropists, he said there is “a whole army of people that are very interested in the software.” PhilanthPro has been opening accounts in the first week of its launch and Palahnuk said he’s in discussions with wealth management firms about adopting the software.

PhilanthPro is suitable for clients who have charitable accounts like foundations, trusts or donor-advised funds, Palahnuk said. Pricing ranges from $3,000 to $5,000 a year depending on client needs.

It is also available in the U.S. and designed to work with the American tax system.

Wealthica opens API to other firms

Financial management platform Wealthica is opening up its application programming interface (API) to other financial institutions, with Wealthsimple using the tool to facilitate account transfers.

Wealthica, which aims to give financial advisors a complete view of their clients’ assets, can show an individual’s accounts from over 150 Canadian financial institutions and brokerages in one place. The platform updates information from financial accounts daily to aid in financial planning and portfolio management.

Wealthica’s API has powered National Bank-owned financial data aggregator Flinks since 2020, and it became available to other fintech platforms after the exclusivity deal ended in May 2023 .

Jeff Matte, Wealthica’s managing director, said Wealthsimple is using Wealthica to help investors transfer registered savings accounts, such as TFSAs and RESPs, from other financial institutions.

Firms often block transfers if there’s “a slight mistake” in the documentation, he said. “For the user, it’s really a painful experience.”

Wealthica’s feature in Wealthsimple allows users to complete the transfer on their smartphone with the system automatically filling in the regulatory forms. “In the future, we’d like to implement that in every brokerage in Canada,” he said.

Wealthica is also rebuilding its budgeting tool with an update planned by the end of the first quarter of this year, Matte said. “We’re really good at connecting accounts and fetching the transaction [data]. The key for budgeting is really the transactions.”

The Montreal-based company, founded in 2015 by Martin Leclair and Eric Lemieux, has over 50,000 users in Canada and $33 billion in aggregated assets, according to a release.

Minerva creates new channel program for anti-money laundering detection

Toronto-based anti-money laundering compliance technology firm Minerva launched a new channel program with Equifax to help financial organizations detect risk from crime.

“What Minerva is hoping to achieve is to show traditional financial services that there’s a far more efficient and effective way to meet their obligations as well as proactively address financial crime in their business,” Jennifer Arnold, co-founder and chief executive officer of Minerva, told Advisor.ca.

Traditionally, compliance professionals used a piecemeal approach to collect client information from multiple software programs and Google search, which isn’t an efficient way to determine risk and decide whether to conduct business with someone, Arnold said.

Minerva uses deep learning models and neural networks to analyze “billions” of data points to help financial organizations detect crime risk. It creates risk analysis of individual customer profiles for elements such as political exposure, sanctions and ongoing investigations. It can also perform fraud analysis in real time to predict and prevent financial crime, she said.

“Instead of waiting to get information back from somebody else . . . you can call it up in a matter of seconds and be really comfortable with the decisions that you’re making,” Arnold said.

Minerva and Equifax started working together about a year ago. Integration with financial services companies is available as a direct API from Minerva and through Equifax’s existing API arrangement with Minerva.

There are at least four other companies that have integrated Minerva into their operation, Arnold said.

“The responsibility is real for everyone in financial services to really understand who they’re doing business with [and] to make sure that they’re not facilitating money movement for criminals,” she said. “The quicker you can discover that the better off you will be.”

Jonathan Got

Jonathan Got is a reporter with Advisor.ca and its sister publication, Investment Executive. Reach him at jonathan@newcom.ca.

Italian financial software company Objectway acquired 100% of Toronto-based fintech company Nest Wealth, including shares previously owned by National Bank of Canada, as the Milan-based firm looks to expand in Canada and the U.S.

Objectway provides financial software to more than 200 banks, insurers, and wealth and asset management firms in more than 15 countries. Roger Portnoy, chief strategy officer for Objectway, told Advisor.ca that his company was looking to strengthen its client onboarding and financial planning offering.

“Nest is an onboarding technology company, a financial planning technology company, and an advisory technology platform and services company. So, in many ways, it was an ideal fit to find a company that had those capabilities that marry with our own,” Portnoy said.

The financial details of the deal were not disclosed.

Nest Wealth was founded in 2014 as a robo-advisor for retail investors before expanding with its Nest Wealth Pro tool for financial advisors. Its clients include asset managers, custodians and some of the big banks — including National Bank, which invested $6 million in Nest Wealth through its venture capital arm NAventures in 2017. Nest Wealth remained independent as that partnership deepened in 2020 with a commercial deal and investment that was worth up to $50 million.

The full integration of the technologies between Objectway and Nest Wealth will be completed in the next 24 months, Portnoy said. Existing Nest Wealth users in Canada will benefit from Objectway’s features, he said, but did not comment on whether the pricing will change.

“Over time, the Nest Wealth client will have an integrated solution from one provider, supported by one provider, upgraded and improved by one provider. It will be more cost-effective, more operationally effective, with reduced vendor risk,” Portnoy said.

Although Nest Wealth and Objectway’s tools will be integrated, Objectway intends to maintain Nest Wealth’s brand.

“It’s a well-known brand and we want to take advantage of the brand for now,” Portnoy said. “Our philosophy as a company is to allow local organizations to thrive and continue their own growth path, as well as integrate where it adds value.”

Objectway already has a small presence in Canada and made marketing efforts over the last five years, Portnoy said, but it didn’t experience as much success as the company hoped for as it lacked local delivery capabilities and could not manage integrations remotely. Acquiring Nest Wealth will help Objectway expand in Canada and the highly competitive U.S. market, Portnoy said.

“We have a strong commitment to grow, thrive and expand in Canada. We obviously recognize that more value can be generated on top of that by prudently going into the U.S.,” he said. “But Canada will, of course, be our first and dominant market for the starting point for our investment.”

Nest Wealth CEO Randy Cass said in a statement that the acquisition would accelerate the firm’s expansion into the U.S. and also open up the market in Europe, Africa and the Middle East where Objectway has a presence.

Jonathan Got

Jonathan Got is a reporter with Advisor.ca and its sister publication, Investment Executive. Reach him at jonathan@newcom.ca.

Toronto-based wealth management compliance advisory firm North Star Consultants and digital wealth management platform developer FusionIQ Canada became referral partners in November.

U.S.-based FusionIQ expanded into the Canadian market in September.

Under the agreement, North Star refers clients who need a digital wealth management platform to FusionIQ and FusionIQ refers clients who need compliance services to North Star, said Howard Atkinson, head of business development at FusionIQ Canada in Toronto.

Many wealth management firms have separate, unconnected applications for tasks like portfolio management, trading and client onboarding. FusionIQ’s platform, FusionIQ One, is an integrated “operating system” where advisors can see all client documentation and accounts in one place, Atkinson said.

The platform records every trade and position, so compliance personnel can review transactions in a consolidated manner, Atkinson said. Firms can also automatically block transactions that should not happen or that require compliance review.

FusionIQ already serves 10,000 advisors in the U.S. and has completed over one million transactions. The platform will be integrated with two Canadian custodians, available in English and French and “Canadianized” for Canadian account formats, Atkinson said.

FusionIQ has signed memoranda of understanding with a “large Canadian institution” and a self-directed investment firm that will offer the platform for consumers. Atkinson said he expects the company to make official announcements in the first quarter of 2024.

Richardson Wealth renews agreement with Croesus

Toronto-based wealth management company Richardson Wealth renewed its contract in November to use Montreal-based Croesus’s portfolio reporting software for another five years. The company, with $34.7 billion in assets under management, has used Croesus Advisor since 2008, said Marc Riel, vice-president of development and strategic partnerships at Croesus.

Croesus Advisor includes portfolio rebalancing tools and management platforms. It also helps advisors adapt to regulatory changes by automating the risk-rating process and reviewing compliance with an investment policy. Most of the firms using Croesus Advisor use it for reporting purposes and to communicate with clients, Riel said.

Richardson Wealth is one of Croesus’s approximately 150 Canadian clients, many of which are major financial institutions, Riel said. Croesus has over 50% market share of financial institutions in Canada and its platform processes an aggregate $1.7 trillion of assets under management, said Frédéric Le Bouar, director of product marketing and outreach at Croesus.

Croesus partners with Mako Financial Technology for KYC

Croesus and Montreal-based Mako Financial Technologies partnered to integrate the Croesus Advisor portfolio management system (PMS) with Mako’s know-your-client and document-processing automation to help advisors streamline client onboarding.

An onboarding process that used to take up to a month to complete can now be completed in a matter of days, Riel said.

Discussions for this partnership began two years ago in response to feedback from advisors who wanted  quicker client onboarding.

Croesus is in “very advanced” discussions with other companies for similar integrations, Le Bouar said: “Digital onboarding, ESG, financial planning — all the functionalities that we don’t provide in a PMS, we want a partnership in some manner.”

Jonathan Got

Jonathan Got is a reporter with Advisor.ca and its sister publication, Investment Executive. Reach him at jonathan@newcom.ca.

Nicholas Yuzwin started his own practice, NPY Wealth Management in Mississauga, Ont., in 2016 after working in the credit union system for over a decade. That same year, his personal computer was attacked with malware while his backup drive was plugged in, and hackers demanded a substantial ransom. 

He lost all his data. 

Though Yuzwin’s business wasn’t affected, the experience prompted him to hire NPC DataGuard, a cybersecurity response company based in Markham, Ont., to protect his company from cyberattacks. NPC was referred to him through his dealer, Manulife Securities Inc. 

“When that happened to me personally, I said, ‘No, this is not going to happen to me in my business,’” he said.  

Financial services companies, with a treasure trove of client information, are a top target for hackers, said Larry Keating, CEO of NPC DataGuard. Wealth management practices of all sizes should take preventative measures, create an incident response plan and know what to do during a breach. 

Preventing cyberattacks 

Financial advisors can prevent cyberattacks through the three pillars of policy, training and technology, Keating said. Standards for passwords and for protecting and sharing information must be accessible to all staff but kept confidential, he said, as they may indicate areas hackers could exploit. He recommended one hour of training per quarter on the policies.  

However, Keating said, “Without a superior investment in technology by qualified people, all the policy and training in the world isn’t going to help you.” 

A proper incident response plan should include attack preparation, breach detection, threat containment, malware eradication and data recovery. Advisors should know what their dealer’s is, and keep paper copies of the plans, as digital copies might be inaccessible during a cyberattack. 

For example, Manulife Securities has minimum software requirements, a system to encrypt sensitive emails and procedures on how to inform clients of breaches, Yuzwin said.  

Responding to a breach 

During a breach, staff must know who to inform in what timeframe, Keating said. This includes management, co-workers, any cybersecurity response firm on retainer and clients.  

They should also know what not to do. Some malware gets embedded deeper into the computer system when a device reboots or waits to steal an administrator’s higher-access credentials. 

A cybersecurity response company will use forensic analysis to help financial firms determine the nature and extent of the breach. For example, hackers may threaten to sell client data, or they may just lock the advisor out of their system.  

“If we were just locked out, that’s a completely different message to a client,” Keating said. Clients would feel a “heck of a lot better” knowing their data wasn’t compromised. 

Communicating an attack is a compliance issue. In addition to complying with regulation, dealers may be bound by carrier policies on how to communicate a breach to clients. For example, Manulife requires advisors to inform clients of an attack by phone and explain what is being done to remedy the breach, Yuzwin said. 

Although advisors may rely on the cybersecurity response company’s expertise to resolve the attack, the advisor and their staff should “without question” be the ones telling clients how it will be fixed, Keating said. “Going arm’s length at that time through the cyber response partner would only make the impacted clients feel even less loved.” 

When informing clients of a breach, advisors must choose their words carefully and may want to consult a lawyer, a cybersecurity response company or an insurer for help, Keating said. Advisors need to tell clients what happened and how it may affect them, issue a sincere apology, explain what is being done to fix the problem, explain what they will do to protect clients (such as credit monitoring) and commit to further updates. 

Saying the wrong thing can make matters worse, Keating said. Speculating about what happened or downplaying the situation can appear insensitive or break trust if the situation turns out to be worse than it first appeared. Advisors should also avoid technical jargon, which could frustrate and confuse clients, and refrain from blaming a third party — even if they caused the breach. It’s better for advisors to take responsibility, Keating said. 

Paying for cybersecurity is a “cost of doing business,” Yuzwin said. It’s the advisor’s responsibility to protect their clients’ data as well as their assets, and doing so shows clients “that you have their best interests at heart.” 

It’s also a way to earn trust from prospects, many of whom don’t think about cybersecurity when they begin working with an advisor, Yuzwin said. He always tells prospects about his practice’s daily backups, email encryption and protection from a third-party cybersecurity company.  

Yuzwin said he’s surprised when financial advisors only enact the minimum required cybersecurity measures. “That’s an accident waiting to happen because they’re eventually going to get hacked,” he said. “And once that happens, good luck in trying to retain your clients because your clients will find somewhere else to go.” 

Jonathan Got

Jonathan Got is a reporter with Advisor.ca and its sister publication, Investment Executive. Reach him at jonathan@newcom.ca.

As artificial intelligence becomes more robust, financial advisors need a method to verify a client’s identity for every transaction that doesn’t happen in person. Advisors can’t rely on recognizing someone’s voice stating their vital information, because scammers can clone voices with AI and steal a client’s identifying information.

But a commonly recommended technique, passphrases, is insufficient for protecting clients from fraudulent transactions. A passphrase is a unique sequence of words advisors ask their clients to recall to verify their identity during voice or video calls, which has a similar function to passwords used to login to online accounts.

Most people are just as likely to forget a passphrase as they would a password, said Jason Pereira, financial planner and senior partner with Toronto-based Woodgate Financial.

Instead, Preet Banerjee, a wealth management consultant and partner with Toronto-based investment analysis firm Wealthscope, recommended using common two-factor authentication methods for every virtual interaction.

At the beginning of any voice or video call, an advisor or their staff could push a one-time code to a client’s smartphone through text messaging or an authentication app and ask the client to read the code back.

“There are ways to automate this way to verify a client’s identity without having to memorize a passphrase for every person that you deal with on a regular basis,” Banerjee said. “That is much more manageable.”

For now, automated two-factor authentication for client calls is still “relatively uncharted,” Banerjee said. In the interim, advisors can tell clients they’ll spend a few minutes at the beginning of each call to go over previous interactions and confirm details that they’ve learned about each other over time to make sure they’re speaking to the right person.

Advisors should ask for information that only the client would know and be aware of which transaction types require extra scrutiny, Pereira said. For example, any request to move money out of an account and redirect it to someplace new is a major red flag.

Verification questions could include what they last discussed, recent transactions or where they said they wanted to go on holiday next year. Advisors who have frequent contact with clients will know more about them and be less susceptible to fraud.

Nonetheless, advisors may want to set up face-to-face meetings for large transactions as a surefire way of verifying a client’s identity, Banerjee said.

Advisors who meet with clients less often can still enhance security by mixing standard security questions with intimate knowledge, Pereira said. Staff can ask for the middle three SIN digits instead of the commonly used first or last three, and ask the client when they last met with the advisor and what was discussed. Taking detailed notes during meetings creates more verification material.

“There’s no replacement for knowing your clients when it comes to protecting them from fraud,” Pereira said. “[It’s] a combination of client knowledge and awareness of the situation.”

Scammers don’t just impersonate clients — some impersonate advisors to defraud their clients, Banerjee said. He said his social media profile was cloned by scammers who tried to sell cryptocurrencies and online trading programs to his followers. Advisors need to educate clients to be suspicious of anything requiring urgency and remind clients to call the advisor’s office if they have questions.

As advisors use new ways to detect and deter AI cloning, scammers will try to leapfrog that technology to circumvent it, Banerjee said. “It’s basically going to be a technological arms race.”

Jonathan Got

Jonathan Got is a reporter with Advisor.ca and its sister publication, Investment Executive. Reach him at jonathan@newcom.ca.

Financial advisors are using new technology to enhance their services and improve operational efficiency. Here are recent fintech developments in wealth management.

FusionIQ expands into Canada

Woburn, Mass.-based fintech firm FusionIQ is introducing its FusionIQ One platform to the Canadian market.

The all-in-one digital platform, which has operated in the U.S. for several years, encompasses digital advice, self-directed investing, finTAMP (its turnkey asset management program), and a digital marketplace for model portfolios run by various fund managers.

The platform currently has more than 75,000 investors through financial advisory firms in the U.S. and is integrated with five custodians, two of which also operate in Canada.

Howard Atkinson, who was recently named head of business development for FusionIQ Canada, said the company will initially focus on two key modules: digital advice and self-directed investing.

Atkinson emphasized FusionIQ’s integrated approach, noting that most financial advisors currently use multiple, disconnected technology applications. He said FusionIQ’s platform is expected to save advisors time, reduce overhead costs and enhance compliance efficiency.

“Every piece of the technology speaks to one another,” Atkinson said.

The platform also maintains a digital trail of all actions, simplifying audits and compliance reporting.

According to Atkinson, the company has been considering the Canadian market “for several years” and is currently in discussions with major custodians.

Broadridge and Salesforce join forces

New York-based Broadridge Financial Solutions Inc. has announced a partnership with Salesforce aimed at improving data exchange and operational efficiency within the wealth management sector.

Through the partnership, Broadridge’s books and records data consolidation, securities-based lending applications and the AdvisorStream content marketing platform will become accessible to customers in Canada using the Salesforce Financial Services Cloud.

Ramprasad Sandilya, vice-president of client solutions and business development, wealth management at Broadridge, said the partnership aims for seamless integration between platforms.

Previously, advisors had to navigate a complex process of data transfer between Salesforce’s CRM and Broadridge’s systems. This process also placed the onus on advisors to manage communication between these cloud-based systems, Sandilya said.

The release of these solutions will occur in phases, with the books and records data consolidation connector already available. Securities-based lending and AdvisorStream are expected to be released on the Salesforce AppExchange before the end of the year.

CapIntel teams up with Conquest Planning, debuts OMNI platform

Toronto-based fintech firm CapIntel has launched OMNI, a tool to help advisors present financial information to clients.

OMNI aims to offer retail investors a better understanding of their financial goals and how to achieve them, thus strengthening advisor-client relationships, said CapIntel founder and CEO James Rockwood. “It’s about delivering educational content in a more accessible way.”

The platform includes an interactive presentation builder with embedded compliance and secure-sharing protocols.

In addition, CapIntel partnered with Winnipeg-based Conquest Planning earlier this year to integrate Conquest’s strategic advice manager (SAM) into its network of over 12,000 North American financial advisors. SAM utilizes artificial intelligence to analyze client information and offer personalized financial planning advice.

The collaboration seeks to expand Conquest’s reach and enhance the financial-planning capabilities of advisors utilizing CapIntel’s investment sales platform.

“Conquest wants to make financial plans actionable and we want to educate clients and give them confidence in their financial future, so the combination really works well together,” Rockwood said.

More than 20 firms in Canada use CapIntel, including BMO Global Asset Management, BMO Insurance, IG Wealth Management, MD Private Investment Counsel and Quadrus Investment Services Ltd.

Maddie Johnson

Maddie is a freelance writer and editor who has been reporting for Advisor.ca since 2019.

Advisors’ work has changed significantly over the last two decades, with digitalization reducing paperwork and the need for support staff, leaving time to serve more clients. But that evolution may be nothing compared to what’s coming as advisors make use of new artificial intelligence tools.

Jason Pereira, partner and senior financial consultant with Woodgate Financial Inc. in Toronto, said AI is “going to accelerate that trend at an exponential level.”

Pereira, speaking last weekend at the Institute for Advanced Financial Planners’ annual symposium in Edmonton, outlined the AI tools advisors can already use to cut down on time spent writing emails, reviewing documents, following up on client requests and developing financial plans.

While the tools may be unsettling to some advisors who see a threat from technology replacing primary tasks, Pereira said it presents an opportunity for advisors to focus on clients.

“The future is not the robotic,” he said. “It’s us being the bridge between the robotic and the human.”

Client meetings

With more client meetings taking place on screen, Pereira is using an AI meeting assistant called Fathom that produces an interactive transcript of the call. Advisors can bookmark items — a trade request, for example — during the call to retrieve after.

“It allows me to stay laser-focused on the conversation and never have to look away, because taking meeting notes can be an interruption to the personal connection,” Pereira said.

Fathom also produces a summary, with links to the point in the video when a topic was discussed, and that summary can be copied into a customer relationship management (CRM) program. Fathom can also interact with other platforms. Pereira’s team uses Slack, so he can push the trade request from the Fathom meeting summary to Slack, where his team will pick it up to process. They receive the snippet of text, he said, as well as the embedded video they can watch to verify the instructions.

There’s also technology to help advisors cut down on the time they spend preparing for meetings. Pereira described a U.K.-based platform called Sifa (he disclosed that he’s on the company board) as a ChatGPT specifically for financial advisors.

Sifa allows advisors to upload client information — financial planning questionnaires, mortgage statements, insurance contracts — and interact with it. The platform can aggregate data from different places. Once the data is there, an advisor could ask what a client’s house is worth, for example, or what their retirement goal is. Right before a meeting, they may want to ask for the names of the client’s children.

Financial plans and client documents

Financial planning software is also adopting AI. Pereira uses Conquest Planning, which has introduced a strategic advice manager — SAM — that can build a financial plan based on the client data entered. Pereira pointed to a study from U.S. financial planner Michael Kitces that found the average financial plan takes 10 hours to construct.

“When we talk about getting financial plans in the hands of more people, one of the big obstacles, of course, is the time and effort it takes to produce one,” Pereira said.

Another tool called FP Alpha, which is currently only available in the U.S., allows advisors to upload a client’s tax return and receive a summary tax profile and tax optimization tips, Pereira said. They can also upload wills and power of attorney and trust documents, creating a summary of the entire estate.

“We all talk about tax planning, but being able to have a visual conversation with clients about this is a great starting point,” he said.

Most advisors use DocuSign now, but Pereira said there’s still the risk of clients just hitting the sign button without understanding the document. To address the problem, he said DocuSign is now providing AI summaries.

“This is incredibly valuable, because it can extract the important pieces of information, put them right in front of the person [and] get them to understand what it is they’re doing,” he said.

Conquering the blank page

Whether it’s writing an email, a blog post or a PowerPoint slide, getting started can be the hardest part. Pereira uses a site called Perplexity to help. The AI search engine allows you to search a topic (How to register a business in Canada, for example), and receive a list of steps that includes sourcing — a starting point from which to answer a client question.

“Within a few seconds, I can produce content that otherwise would have taken me a while to think through — to basically compose, to format, to edit,” Pereira said. “So it’s a shortcut.”

Another platform called ChatPDF allows you to upload a document (the Income Tax Act, for example) and ask the platform questions.

Pereira said he uses Grammarly to check spelling and grammar in emails, but the platform now has an AI bot that goes much further, scanning an email for intent and tone, and providing recommendations for how to reply. While he wouldn’t use it to respond to a client’s portfolio question, Pereira said the tool “has cut down on my less cognitively burdensome emails.”

Safety and compliance

Businesses and governments around the world have raised privacy concerns about ChatGPT, with some organizations banning its use.

“Do not ever put client information into ChatGPT or any open protocol,” Pereira said.

Some of the tools, such as Sifa and Conquest, are specifically for the financial industry, while others, such as Fathom, are for more general use. Pereira said it’s up to advisors to evaluate the platforms’ security and make a case to compliance.

It’s also up to advisors to take what these new platforms provide and use it to coach clients — not to abdicate their financial planning knowledge to the technology. If financial planning software says a client should start taking CPP at 70, for example, you have to be able to explain why.

As technology makes more tasks easier, Pereira said advisors need to spend time understanding clients’ personal biases and hangups around money — the things that get in the way of following advice — and develop customized plans based on clients’ behaviour.

“Sometimes you just need to change the advice, because it doesn’t matter if it’s 100% optimal,” he said. “If it’s 85% optimal but it’s what they’ll accept and it’s what gets them what they want, that’s really what matters.”

Disclosure: Advisor.ca was a media sponsor of the IAFP symposium. Part of the sponsorship included transportation costs. No coverage was guaranteed in exchange for the sponsorship.

Mark Burgess

News

Mark has been the managing editor of Advisor.ca since 2017. He has been covering business and politics for more than a decade. Email him at markb@newcom.ca.

Between online trolls and wary compliance officers, social media can be an intimidating space for financial advisors. As with exercising, the best plan is the one you’ll stick to, said Mark McGrath, a financial planner with PWL Capital Inc. in Squamish, B.C.

McGrath decided in July 2022 that he would write at least one thing every day on Twitter. The fruits of those posts include more than 100 meetings this year with prospects who found him on the platform now known as X.

McGrath spoke Thursday at the Institute for Advanced Financial Planners’ annual symposium in Edmonton. Joining him on the panel was Robb Engen, a fee-only financial planner with Boomer & Echo in Lethbridge, Alta., and Aravind Sithamparapillai, an associate with Ironwood Wealth Management Group in Fonthill, Ont.

All three agreed that advisors don’t need to be on every platform. A better strategy is to choose one you’re comfortable with, that suits your personality, and that you’ll post on consistently.

For Sithamparapillai, a self-described extrovert, that means posting videos on Instagram. He tried other channels but found his target audience of midwives prefers the Meta-owned platform, and he creates content with those potential clients in mind.

McGrath and Engen, on the other hand, both described themselves as introverts and prefer writing — tweets for McGrath and blogging for Engen.

“I don’t feel I could do a succinct, 30-second video that’s really going to pop, so I write a 1,000-word blog post instead,” Engen said.

Writing about common financial planning topics, such as when to take CPP, helps him engage with his target of mass-market clients.

McGrath often writes about tax planning, which is of interest to his target of physician clients. It’s important to visualize your ideal client and write for them, he said, as that’s who will contact you.

McGrath acknowledged that putting your voice out there can be terrifying. One consolation is that, at least at first, not many people will be paying attention. He said advisors should commit to posting for six months to a year before gaining traction. At times that may feel like writing into the void, but showing your personality and engaging with people who respond to posts will help build a following, he said.

“When people are going to engage with you or hire you, if you’ve shown that side of yourself, they feel like they know you,” McGrath said.

That makes it harder to outsource social media to a third party, whether that’s an agency or someone at your firm, Engen said, since consistency and authenticity matters.

But posting gets easier the longer you do it, McGrath said. You get faster and begin to see ideas everywhere. He also said topics don’t have to be complicated or original. Writing about something you already know well — how an RRSP works, for example — can be easy and drive the most engagement.

Different firms take different approaches to advisors’ social media use. McGrath said he can write on X without consulting compliance, but blog posts require pre-approval. Sithamparapillai said he works with his chief compliance officer to determine what he can post on Instagram. Most financial planning topics are fair game, he said, while investments are more difficult.

“It’s about working with compliance and understanding where the sandbox is,” Sithamparapillai said.

McGrath recommended being cautious when responding to people online, and to be gracious rather than combative when someone points out a mistake.

And some topics just might be too heated to be worth it. “Don’t talk about dividends with people on Twitter,” he said.

Disclosure: Advisor.ca was a media sponsor of the IAFP symposium. Part of the sponsorship included transportation costs. No coverage was guaranteed in exchange for the sponsorship.

Mark Burgess

News

Mark has been the managing editor of Advisor.ca since 2017. He has been covering business and politics for more than a decade. Email him at markb@newcom.ca.

When you think of AI, do you think of Alexa, Siri and Rosie, the helpful robot from The Jetsons? Or do you think of Skynet taking over the world, like in the Terminator movies?

Regardless, artificial intelligence (AI) has burst out of sci-fi screens and into our everyday lives. It is now used in a wide range of applications, from facial recognition to self-driving cars. But what about the investment industry? Could AI revolutionize the way we invest? And should advisors be worried?

Some experts believe AI could have a profound impact on the investment industry. They argue AI could help remove human biases and emotions from investment decisions, leading to better returns. For example, AI could identify and eliminate behavioural biases, such as the tendency to buy high and sell low. And of course, there’s stock-picking.

A recent survey by online investing platform eToro found that a majority of U.S. investors are open to using AI to help with stock-picking and trading. Younger investors were especially open, with 71% of those aged 18–44 willing to let AI pick their stocks and 69% willing to let AI make trades for them.

Other experts are skeptical about the potential of AI to revolutionize the investment industry. They argue AI is still a relatively new technology, and that several challenges need to be overcome before we can fully integrate it into the investment industry. For example, AI algorithms are trained on data; if that data is biased, then the algorithm will be biased as well. This could lead to problems we can already observe, such as discrimination in lending decisions and inaccurate or inappropriate investment recommendations.

Despite these challenges, AI could play a significant role in the investment industry. In the future, AI will likely be used to automate tasks such as data analysis and risk assessment. This could free up human advisors to focus on more strategic tasks, such as portfolio management and asset allocation.

We are already seeing that change. Any advisor who relies on their superior stock-picking skills likely didn’t do so well over the last 10 years, and many will get pushed out of the industry completely in the next 10. Because technical, quantitative actions are exactly what AI is good at, human advisors will have a hard time competing.

The human touch

Luckily, investing is about more than just crunching numbers. Dalbar, JP Morgan and others have reported that investors underperform the market by around 5% annually on average. This so-called behaviour gap is not because of poor stock-picking skills but because of poor investor behaviour — chasing returns in good markets and panic-selling in bad markets. This is not something AI can fix, at least not anytime soon.

For example, AI doesn’t understand the fear a client feels when their portfolio value drops. This fear can lead to irrational decisions, such as selling stocks at a loss. Because AI can’t understand these emotions, it can’t help people overcome them.

Creating the perfect meal of protein and vegetables doesn’t solve anything if people decide to gorge on junk food instead. Similarly, building better and cheaper products won’t make a lasting difference if investors are still prone to chasing returns and panic-selling.

AI also doesn’t understand the “why” — the reason a client was saving for retirement or for their kids’ education — which human advisors can use to calm their clients in tough markets. It can’t answer, in a compelling and empathetic way, the one and only question clients care about: Am I going to be OK?

Behavioural coaches help clients understand their own biases and triggers, and provide them with tools and strategies to overcome them. There is no AI or technology solution on the horizon that can help clients help themselves in the moments that count.

The advisor who complements their strong technical skills with the skills of behavioural coaching is the advisor of the future.

Sam Sivarajan is an independent wealth management consultant and behavioural scientist

Sam Sivarajan

Planning and Advice

Sam Sivarajan is an independent wealth management consultant and behavioural scientist.

Every month, Advisor.ca looks at a fintech platform that’s working with wealth management firms.

Company: PureFacts Financial Solutions Inc., a wealthtech provider that offers digital onboarding, data analytics, goals-based investing tools and other services.

CEO: Born and raised in Montreal, founder and CEO Robert Madej started teaching himself programming when he was 12. He and his brothers were allowed to play video games but had to write their own software. After earning a master of mathematics at the University of Waterloo, Madej started his career working on complex math and programming with YMG Capital Management Inc., later acquired by Fiera Capital Management Inc. In 1997, Madej founded custom software developer LYNXDev Inc., from which PureFacts was spun off.

Funding: Scotiabank, Canadian Business Growth Fund and Round 13 Capital Inc. provided a combined total of $37 million in debt and equity financing, which PureFacts started to raise after it acquired Zurich-based billing and commission software vendor Quartal Financial Solutions in 2020.

Products: PureFacts’ software helps advisors manage fees and commissions, analyze client data to identify needs and opportunities, and onboard clients digitally. It also has a goals-based investing tool to help clients plan for retirement and other life stages.

How it makes an advisor’s life easier: PureFacts aims to help advisors increase the size of their practices more quickly and profitably, Madej said.

It uses AI to look through advisors’ books of business and find similarities among clients, said Mehrnaz Shokrollahi, PureFacts’AI team lead. The technology then segments the clients into different buckets — based on factors such as how frequently they make contributions, assets under management and age — and feeds that data into a model.

The software can then identify which clients are most likely to leave by looking at past client behaviour. The characteristics that determine a client’s flight risk are unique to each firm because the machine learning model is re-trained with a firm’s data, and not with other firms’ data, Shokrollahi said.

With its technology, PureFacts aims to give an advisor a “conversation starter” if the AI predicts a certain client is likely to leave, Shokrollahi added. For example, the AI might find that older clients are more likely to leave than younger clients, so an advisor could suggest a decumulation product.

PureFacts also uses AI for product selection, predicting which products would suit a client based on their life situation. There’s a goal-tracking module and a decumulation tool that helps advisors tell clients how to withdraw from certain accounts in tax-efficient ways.

PureFacts also has billing software that helps advisors aggregate accounts into households. This saves clients money because they often pay lower fees based on total household assets, Madej said. It also uses AI to predict when the data used to calculate fees is incorrect. The idea is to catch an error before the client is billed instead of having to reverse an incorrect fee.

Wealth management firm adoption:  PureFacts has more than 100 corporate clients — including Desjardins, Fidelity, iA Financial Group, Manulife, National Bank Financial, Scotiabank, Mackenzie Investments and Canada Life. Boston-based GW&K LLC, with over $47 billion in AUM, began using PureFacts for fee calculation, processing and reporting this year.

Pricing: Cost depends on the number of accounts in the business, on a per-advisor basis. Madej said in most cases firms pay less than $100 per month per advisor.