It was a more than robust week in the land of Canadian ETFs. And the Canadian digital wealth managers continue to evolve and grow. Yes we had some ‘consolidation’ in the Canadian Robo Advisor space. Planswell shut its doors laying off nearly 60 employees.
In you are a Globe and Mail subscriber you can read Clare O’Hara’s article, Canadian Robo Advisor Planswell shuts down after investors pull planned financing.
In the Financial Post you can read Fintech startup Planswell shuts down.
It’s a tragic story that involves sexual harassment charges against a former Planswell founder and executive. Those charges and the handling of the unfortunate event likely played into the removal of the funding. And it’s certainly a sad story that was played out like a soap opera on social media channels. There were so many accusations and so much innuendo. Crisis management in 2019 presents a very unique challenge.
Was Planswell a Robo Advisor?
I’d suggest that Planswell was not a Robo Advisor. They were certainly a fintech company. But the thrust of the company was ‘higher level’ digital financial planning. They would uncover massive financial planning holes and offer insurance and mortgage direction and products. The investment component was not a growing concern.
Over 100,000 Canadians had completed the only surveys. Planswell discovered that the financial planning basics were often not covered. Too many Canadians did not have an emergency fund. Too many Canadian families did not have any insurance. And of course, too many Canadians are invested in high fee mutual funds.
A failed business model?
But at the core it was a business model that was not working. It was not a profitable venture according to the National Post …
The company’s latest annual financial report, however, shows steep and growing losses. It brought in just $155,612 in revenue in 2018, with net losses of $5,403,326, up from $3,812,495 the year before.
Planswell investment clients have some great options.
Planswell managed just $20 million in investment assets. That’s likely just a few hundred clients. But these clients have some great options. Planswell had contacted those clients and suggested digital wealth management firms that share the same custodian. The investments are not held at Planswell, but at BBS Securities.
Planswell had offered WeatlhBar, Justwealth and Smart Money as options that use BBS Securities. In all honesty, I think you’ll be going to a better place on the investment front. I would certainly put WealthBar and Justwealth at the top of the heap with respect to Canadian Robo Advisors. They both offer a combination of more robust investment advice and financial planning. They both have some unique and advantageous investment options.
Here’s my WealthBar review, get treated like you’re rich even when you’re not.
And Justwealth is the Canadian Robo Advisor that knows when to get personal. This is certainly a time when investors need that personal touch. Dozens of Planswell clients are now discovering that their file lands on the desk of the Chief Investment Officer.
Here’s a review of Smart Money courtesy of Young and Thrifty.
It’s a sad story. My heart goes out to the victim of the harassment. My heart also goes out to the dedicated employees who lost their jobs. And I’ll add that I did feel that the team at Planswell had their hearts in the right place. There was incredible energy and a unique culture at Planswell. They were passionate about the mission. I know we have not seen the last of CEO Eric Arnold.
CI Financial acquires Wisdom Tree.
This is very good news as CI buys the Canadian Wisdom Tree ETF line-up.
With the deal, CI Financial acquires 14 ETFs with a combined $958 million in assets, adding to the $7.4 billion on its CI First Asset ETF platform.
CI also recently acquired a majority stake in WealthBar. Obviously the folks at CI Financial can clearly see the future of wealth management in Canada. The business models that will work moving forward put the client first and include low fee investments. As Walter Gretzky always reminded his son Wayne …
Skate to where the puck in going.
Canadians have given Robo’s the cold shoulder.
Here’s a wonderful podcast featuring Josh Book of Parameter Insights. Wealth Management Today offers a wonderful podcast. That episode covers the Robo space from more of an American perspective. Josh and I are working on a Cut The Crap Investing post that will cover the Canadian digital wealth management space. Josh will use the learning from the US market and apply that to the Canuck Robo-land. Of course Josh will also apply the insights from his proprietary research on the Canadian digital wealth management scene.
While Canadian ‘Robo’ Advisors are still experiencing incredible growth rates, the assets under management (AUM) is still less than one half of one percent of Canadian retail assets. Cut The Crap Investing certainly feels that these firms are the answer for the vast majority of Canadian investors. They offer advice (yes human) and low fee ETF investment portfolios. The portfolios are managed for you. There’s nothing for you do to. You don’t have to understand investments beyond a very basic level. You don’t need a lot of money to get started.
On Twitter (Dale Tweets too much) I opined on …
Pot stocks have been getting crushed. The sector has incredible potential, but carries incredible risks. For now it’s speculation. I wrote on that in this post that features Horizon’s ETFs.
For many links and great reads here’s the Weekend Reads from myownadvisor.
Here’s an interesting post that is sure to bring up much debate, Robb Engen suggests that Canadians have an income problem. Many had suggested that Canadians have a high tax level problem. I’m with Robb in that there is also an inflation problem. That has destroyed spending power.
On Findependencehub a very helpful post that asks do spousal RRSPs still have a place in financial planning?
We all want to know how to make our portfolio monies last in retirement. Here’s a wonderful and well-balanced post from Milliondollarjourney – The Ultimate Guide to Safe Withdrawal Rates in Canada.
Mike The Dividend Guy offers his October Dividend Income Report. In the end Mike is a total return guy, and I agree with him, Apple is a money-making machine. That’s a great read.
Genymoney offers her net worth update .
And lastly, Canadians turn to cash on the Globe and Mail. I will be back with a dedicated post on that subject.
Thanks for reading. Thanks for sharing this post. Have a great weekend.