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After discovering that he was paying more than $20,000 a year in fees, Bruce Pinn, a 57-year-old executive from Toronto, decided to make a drastic move and fire his investment adviser of 18 years.

While turning to a do-it-yourself online broker platform would have been a logical next step for someone conscious of fees, it didn't hold much appeal for Mr. Pinn, a self-described "invest and forget" investor. Instead, he decided to move his entire portfolio of more than $500,000 to Nest Wealth, a robo-adviser platform that is charging him a $960 annual flat fee and will automatically rebalance his portfolio as the market changes. In addition, Mr. Pinn pays additional underlying fund fees of approximately $1,000.

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When robo-advisers first launched, they were seen as a tech fad for millennial investors. But now, people such as Mr. Pinn, who belong to an older demographic, are turning to their services. The average age among the 14 robo-advisers now in the Canadian marketplace is about 44 years old.

In the United States, a majority of robo-adviser investors do not fall within the millennial category as 48 per cent of them are over the age of 36, according to market-research firm Accenture.

Robo-advisers – also referred to as online wealth managers or digital advisers – are just beginning to gain traction in the Canadian financial arena. There are now more than double the number of robo-advisers as there were just three years ago.

These web-based platforms offer clients an online risk-assessment tool which very quickly calculates an appropriate asset allocation based on age, financial goals and risk tolerance. Investors also have the option of speaking to a human portfolio manager throughout the process. The results provide clients with a recommended investment portfolio predominantly made up of exchange-traded funds – all for much lower fees than usually offered by traditional financial advisers.

"Older investors are concerned about reaching their financial goals or making their savings last as long as possible," says Randy Cass, chief executive of Nest Wealth, one of the first robo-advisers to launch in Canada. "They are the perfect audience for these platforms since the lower fees can add hundreds of thousands of dollars to their savings."

While the amount of overall assets under management (AUM) of robo-advisers in Canada is not known (only one firm, Wealthsimple, has publicly announced its AUM recently hit more than $1-billion), the services are booming in the United States: the platforms held $103.3-billion (U.S) in assets under management as of June, 2017, according to a report by Corporate Insight, a market research firm in New York.

The founders of Wealthsimple initially didn't plan to market to an older generation. Instead, as millennials themselves, CEO Michael Katchen, 29, and chief investment officer Dave Nugent, 32, were looking to fill a gap they saw within their 25-to-30 age group when it came to investing.

But since launching in 2012, the company has seen a shift in its user base with more Gen X clients – the generation preceding millennials – setting up accounts, Mr. Nugent says, as well as boomers who are hearing from their children about the online wealth managers who can save them money.

Indeed, fees are the biggest driver for change among both the Gen Xers and baby boomers in North America. Ninety per cent of baby boomers rank fee structure as important when selecting a financial adviser, with 91 per cent of Gen Xers saying the same, according to a recent Accenture research study.

Traditional wealth managers charge fees between 1 per cent to 2.5 per cent. In comparison, robo-advisers charge a fraction of that, ranging between 0.2 per cent to 0.6 per cent, depending on account size.

"Today's population demands transparency and control in wealth management, just as they do in education, consumer goods and other industries," says Kendra Thompson, wealth management global lead with Accenture. "They are vocal in their desire for lower fees; no longer will loyalty keep them in one place."

Mr. Pinn admits he didn't particularly pay attention to his overall fees with his financial adviser, an oversight he now regrets.

"I've always been that person who just dumps the money in and never looks at it again," Mr. Pinn says. "As long as I've been involved with the mutual fund industry, I was just letting my adviser run the funds. I never took a second glance."

It wasn't until a phone call from his financial adviser – with a pitch for a new cheaper investment product – that the light bulb went off.

"I had been with him for 18 years and was surprised that it was the first time he was offering to save me money," Mr. Pinn says. "All of a sudden he wanted to switch me out of mutual funds – the same products he had been selling me on for years."

After hanging up the phone, Mr. Pinn took a closer look at his portfolio and discovered he was predominately invested in the bank's own mutual fund products; and despite qualifying for the high-net-worth funds that provide lower management fees – they were still costing him more than $20,000 a year in fees.

Recent regulatory changes that came into effect earlier this year have highlighted the dollar amount Canadian investors are paying for financial advice. For many investors, the transparency around fees has been murky at best.

Four years ago, Leonard Rempel, a 58-year old manager in the hospitality industry in Oakville, Ont., decided to dig into his own portfolio when the regulatory changes were getting attention in the media.

As a result, he discovered many of his investments were sitting in funds with a deferred sales charge (DSC), meaning he would be charged a redemption fee for taking out his funds early. (Many DSC funds have redemption fees that charge a certain percentage within the first seven years of the investment).

After calculating that his investment fees were eating up a large chunk of his profit, he knew he wanted to move away from the traditional mutual funds his adviser had put him in – which were charging 2 per cent to 2.5 per cent in fees.

Mr. Rempel decided to bite the bullet and paid out $19,500 in deferred sales charges to make the transition to a robo-adviser.

"The idea that robo-advisers are only made up of robots is a real disservice to them because I've had more one-on-one chats with the portfolio managers at Wealthsimple than any of the financial advisers I have had in the past," says Mr. Rempel, who is on track to retire in two years.

"I don't have a problem paying for a financial adviser – they have to make a living as well – but the performance has to be there, too, and I wasn't seeing that."

With a portfolio north of half a million dollars, Mr. Rempel didn't jump all in at once. He initially transferred 30 per cent of his portfolio to test out the process, and over the past year, has moved 95 per cent of his funds to the online platform. The remaining 5 per cent of his portfolio is held at a discount brokerage: "I enjoy doing some of my own investing, but I also know that I am not good enough to handle my entire portfolio," Mr. Rempel says.

"We always thought people who had reasonably straightforward requirements in their retirement years would find robos appealing because they don't actually need many of the aspects that are found with full-service offerings," Wealthsimple's Mr. Nugent says. "We're finding more investors, and older investors in particular, are recognizing that we're offering a really high-value service … clients are getting sophisticated advice and financial planning – they're just getting it at a lower entry point and for a lower fee."

Lowering overall fees is what drove Kent Watts to take the leap.

A 69-year old retiree, Mr. Watts stumbled upon the amount of fees he was paying while calculating what his income would be once he officially retired. He quickly realized that as a conservative investor, the money he was making on his bank-owned mutual funds was being eaten up by fees.

"For the amount of money I had to play with, I didn't feel I had a lot of options other than the bank at the time, but as I approached retirement I had more time to look at my statements and I wasn't pleased with what I saw," Mr. Watts says.

Mr. Watts transferred a $25,000 tax-free savings account (TFSA) and $16,000 registered education savings plan (RESP) he has for his youngest daughter to robo-adviser Justwealth – placing one account in an equity growth portfolio and the other in a more conservative fund.

He continues to contribute $200 a month to his TFSA and is satisfied with the level of human interaction he receives – something he rarely experienced from his bank.

"Usually you fill out a form from the bank and you have to wait days before you hear anything, but I was pleasantly surprised with how quickly someone got in touch with me," Mr. Watts says. "That made the entire process really comfortable … to have a human connection from the beginning and someone I could contact at any time if I needed help in the future."

Justwealth Financial, a robo-adviser that entered the market in 2016, has more than 50 per cent of its assets coming directly from boomer clients, where capital preservation is key to their investment strategy, CEO Andrew Kirkland says.

"These clients are entering a stage in their life where they are looking to keep more of their initial investment secure," says Mr. Kirkland, who anticipated early on that older investors would want to sign up. "We have investment objectives that are tailored specifically for the boomer investor, for someone who is looking to live off income from their investment portfolio. We certainly didn't build these portfolios for a millennial investor."

Robo-adviser Responsive Capital Management has the highest average age of users in Canada at 50. The higher age may correlated with the higher minimums required to a open an account. Typically, robo-advisers have a $5,000 minimum, whereas Response requires $10,000 for a non-registered account and $15,000 for an RRSP.

One segment of investors joining Responsive are DIY clients from discount brokerages who no longer want to be responsible for monitoring their own investment portfolios once entering retirement.

"We are hearing from clients that they don't want to stress about markets when they are off travelling for extended periods of time or they begin to worry if their spouse would be able to manage a DIY stock portfolio if something were to happen to them," says Thomas Holloway, co-founder and portfolio manager at Responsive. "Paying an additional 50 basis points for peace of mind is exactly what these investors are looking for."

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