1. The Evolution of Online Advice Opportunities & Challenges
Randy Cass, CEO, Founder, Portfolio Manager, Nest Wealth
Chris Jepson, Senior Legal Counsel, Compliance and Registrant Regulation Branch, Ontario Securities Commission
Silvio Stroescu, President and Head of Digital Investing, BMO InvestorLine Inc.
David Wright, Senior Legal Counsel, Business Conduct Compliance, Investment Industry Regulatory Organization of Canada
December 4, 2017

2. Today’s discussion Online Advice version 1.0
Current Developments – Evolving Online Strategies
Anticipated Developments - Convergence
Regulatory Challenges

3. Online Advice – Version 1.0
Portfolio Managers (IIROC or CSA) providing discretionary investment management services at low cost to retail investors through an interactive website
Limited number of model portfolios consisting of unleveraged ETFs or mutual funds
Online KYC – Generally 6-20 questions
Often Passive - Automated rebalancing
Always-Call & Call-As-Needed models

4. Evolving Online Strategies
Online advice as a stand-alone business
VERSUS
Contractual arrangements – IIROC & PM
Hybrid Business Models
Virtual Group

5. Evolving Online Strategies – Contractual Arrangements
Online platforms (build, buy or rent) in financial groups
Referral arrangements
Joint platforms
Licensing/White Labeling

6. Evolving Online Strategies – Hybrid Model
Direct to client
Efficiency tools for existing/ traditional channels
Hybrid model

7. Evolving Online Strategies - Virtual Group
The virtual group
Online advisor services clients of a virtual group consisting of financial planning, insurance, tax, etc.

8. Anticipated Developments
The online dealer (vs. discretionary portfolio manager)
Accelerated convergence between traditional channels and online platforms

9. Regulatory Challenges - KYC
KYC Sophistication
Number and depth of questions
Linear questions vs. answer dependent paths
Behavioral economics insights

10. Regulatory Challenges – Products & Services
Increasing product complexity
Not just ETFs and mutual funds
Always-Call versus Call-As-Needed

11. Regulatory Challenges – Supervision
Extent of human touch-points
Initial supervisory review – “red flags”
Ongoing client/advisor communication
change in client circumstances
market turbulence

12. Regulatory Challenges – Conflicts
Disclosure of nature of product offering
Proprietary product use in model portfolios
Biases built into algorithms

13. Regulatory Challenges – Advisors
Client Relationship managers or wealth concierges?
Best Interest Standard in the context of online advice?

14. Parting remarks From our panelists Questions from the audience
Thank You for Attending Today’s Event