Technological tools: Threat or ally for advisors?

It’s no secret that millennials, or Gen Y - the generation born between 1981 and 1996, according to Statistics Canada - are very active on social networks. They swim in the digital world like fish in water, and technology is an integral part of their daily lives.

Limits to autonomy

This thirst for online services makes them natural customers for robo-financiers, or fintechs, such as the brokerage site Wealthsimple. “This platform has changed the game and is clearly targeting the younger demographic. The same goes for online banks such as Tangerine. In addition, traditional financial institutions have followed the trend and now offer online brokerage sites,” notes Philippe d’Astous, professor in the finance department at HEC Montréal.

Financial planner Antoine Chaume, a wealth management consultant at Assante-Équipe Major, doesn’t see a threat, but an opportunity. “Fintechs can be useful. At Assante, we’ve even developed a robo-financial department. When we meet with our clients’ children, we can refer them to this option; it’s a way to gradually bring them into the fold.”

Louis D’Anjou, director of business development at Desjardins Online Brokerage, agrees and sees these tools as complementary to the services advisors offer. “Young people want fast and efficient tools, and commission fees are an important criterion in their choice. An online platform gives them access and allows them to take their first steps in the field. But once they earn a higher salary, they want to understand where their money is going and get advice. They are empowered, but there’s a limit to that empowerment.

Emile Khayat, senior regional manager at TD Wealth Management, agrees. “They get to the point where they can’t go any further. Plus, there’s so much information online that you need someone to help you sort through it,” he says. “When the situation is complex, you can’t rely on a machine,” says Antoine Chaume.

63% OF GENERATION Y INVESTORS
BELIEVE THAT WORKING WITH AN ADVISOR IS
CRITICAL TO THEIR FINANCIAL SUCCESS.

60% FEEL
AN INCREASED NEED TO HIRE AN
ADVISOR DUE TO
ECONOMIC UNCERTAINTY.

Source: Fidelity Investments, 2022.

Age is also an important factor, says Emile Khayat. “Once you’ve had a certain amount of life experience and complexity, you tend to seek financial advice because you understand the importance of having a plan based on specific goals.”

A 2020 study by IMI International for Fidelity found that nearly half of young Canadians (18-34) invest with a financial services advisor. In addition, a 2021 Leger survey conducted for the CSF found that 75 per cent of millennials prefer to meet with an advisor in person.

Rely on complementarity

However, technological tools can play a complementary role, notes Guillaume Roux, market manager, financial planning at BMO Financial Group. “While this generation is very involved and knowledgeable about managing their finances, they like to work with advisors. Advisors can help them navigate, verify information, and create a financial plan that meets their needs. At BMO, we’ve also adapted our practices: email, text, social media presence - it’s all about being proactive to capture the attention and meet the expectations of this generation.

For her part, Alexandra Desroches, a financial planner on Jean-Maurice Vézina’s consulting team, does not see technology as a competitor. “It will not replace the human being. On the contrary, we can make it an ally that makes our work easier. For example, we work with software that uses artificial intelligence for financial planning. But the relational aspect remains essential because it helps build trust. For example, even though we do a lot of video conferencing, my clients still want to meet with me in person from time to time.

And dealing with a robo-financier removes the human touch. “There is a certain pride in saving, even among my younger clients. They call me to tell me they’ve put some money aside and are ready to invest a certain amount. They appreciate our guidance,” says Élise Chartier, Senior Wealth Manager and Portfolio Manager at Desjardins Securities.

Her father, Daniel Chartier, who holds the same position at Desjardins Securities and with whom she works closely, adds that technology tends to distort savings and make things even more abstract.

Burned by the stock market

Jean-Philippe Vézina, financial planner and tax specialist with the Jean-Maurice Vézina consulting team, believes that the younger generation wants to learn, know more and be well informed. “Young people want it to be fast, to have everything at their fingertips, to open an account on their phone in five minutes. There are also some things they want to do on their own, like calculate their RRSP contribution, so we give them tools. But when the stock market goes through a lot of turbulence, as it did last year, emotions take over. That’s where we can make a difference.

From this perspective, 2022 was a good lesson for some young investors who were too reckless and attracted by the sirens of digital startups and cryptocurrencies. “Many realized that because of their lack of knowledge, they were making a bit of a mess on online brokerage sites,” notes Alexandra Desroches. Since 2020, we have also been witnessing a kind of gamification of investing, argues Antoine Chaume. “Young people play the stock market as if it were a casino. There’s a gambling aspect to thinking that if you invest $100, you could end up with $100,000 in six months. They see it as a game, whereas the stock market is serious, and you must think long term. So, there is a lot of education to do. We make them think, we help them understand the market better, and we guide them through it.”

The advisor also plays a protective role when emotions come into play, especially when markets are very volatile. Young people are more reactive and impulsive in times of turmoil than their elders, who have seen snow before... For example, they lived through the storm of 2008 and have known interest rates much higher than today's. They know that patience and long-term consistency are two key ingredients for success. “Younger clients have taken more risk in the stock market, and many have been burned badly. This drives them to seek our expertise,” concludes Louis D’Anjou.

In other words, advisors have a long way to go!