Financial technology companies offer advisors easier ways to track work as know-your-product and enhanced suitability rules ramp up.
As Client Focused Reforms (CFR) push the Canadian wealth management market to evolve, a number of wealthtech firms are poised to help advisors roll with the punches.
New conflict-of-interest rules took effect July 1, marking just one aspect of the changes put forth by the Canadian Securities Administrators (CSA). Under updated know-your-product (KYP) and enhanced suitability provisions, advisors must prove the products they select are the most appropriate for their clients.
According to Four Eyes Financial founder Lori Weir, CFR has been a driving force behind the development of their newest suite of compliance and advice solutions for advisors.
‘Meeting regulations around KYP and enhanced suitability are doable, but with these new regulations you have to show your work,’ said Weir. ‘With our digital services platform, they can go through all those steps in one platform and do it efficiently.’
Moreover, Weir said technology is giving advisors a chance to get value out of compliance protocols.
‘Advisors are able to present it in a way that’s pleasing to the client, and that can improve the advisor-client experience. It’s not just about ticking a box,’ she said.
‘Tech is helping with compliance, but also providing a deep level of understanding. The more people feel understood, the more committed they are to the advisors and confident in those products.’
Weir is echoed by Ken Lotocki, chief product officer at Conquest Planning. Their planning software alerts advisors when they may be overlooking a detail, and offers suggestions about how to optimize a client’s financial plan. Clients can also have access to their plan.
‘As a client, or a compliance department, you can potentially look at the reports and say “I saw you didn’t suggest that product,”’ said Lotocki. ‘The system works in the best interest of the client, kind of like a little fiduciary. Most advisors are acting in the best interest of their client anyway, and a little system help doesn’t hurt.’
Lotocki also says technology helps advisors dig down into their data and offer up the best possible products.
‘If you don’t have an insight into trends, or things the client can or might do, you tend to build up a bias. The insight you’re going to glean from a consistent technology stack, and the data you can get, is going to benefit the client because they won’t be pigeonholed into certain products.’
Independent financial planner Scott Sather recently left RBC Dominion Securities to launch Awaken Wealth Management, which is affiliated with Aligned Capital. He says a lack of good technology was part of his decision to forge his own path.
‘Having just left a big bank brokerage, one of the many reasons was the lack of technology-availability, integrations, access, and efficiency. I found many times we were three to five years behind what others were using and just ended up plugging things in to fill gaps versus really offering the best that was available,’ Sather said.
He said he wanted a digital solution to help assess a client’s risk appetite beyond the standard questionnaire, especially with more offerings popping up in the US. Sather now uses Riskalyze to meet that need.
‘Having seen what’s available to our counterparts south of the border, I knew I had to invest in a technology that would flesh this out. The ability to have this program integrate into various other programs like my website and CRM makes it so much easier to stay on top of the various regulatory changes,’ Sather said.
Sather also believes a robust tech system does more than simplify his business. He said it gives him the capacity to better meet client needs.
‘With Awaken Wealth I’ve tried to ensure I’m using technology to improve my efficiency and better manage my time, so I’m able to spend more time doing what matters; helping clients improve their financial lives.’
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