Once complete, premium products are then introduced into the ecosystem such as insurance, lending and estate planning in order to complement trading and investment portfolios. There is also the ability to leverage such platforms as software-as-a-service to advisors to vastly improve their client experience. Here in Canada, there are a number of companies backstopped by larger firms such as CI Financial or Power Financial that are pursuing this model and gaining significant traction.
For example, many endowments and other institutional investors have as much as 50 per cent of their portfolios in this asset class compared to less than five per cent for the average retail investor. While recognizing the difference in time horizons, it wouldn’t be unreasonable to see this retail allocation to expand to 10 to 15 per cent, which would still represent impressive growth.
The reason it is so attractive to advisors is because it is an “open source” model instead of the traditional top-down approach that can put too much focus on products advisors are being incentivized to sell.Article content continued