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BMO to launch investing site with a personal touch

BMO to launch investing site with a personal touch

Fernando Morales/The Globe and Mail

Bank of Montreal is going after an untapped segment of the investor market – people who aren't rich enough to have their own personal broker, but want more detailed advice and stock recommendations than the typical online trading account offers.

On Monday, Canada's fifth-largest bank will launch an online investing site that will allow members to direct their own portfolios, but also tap into analysis from live advisers when they need it. The project, called adviceDirect, has been in the works for more than two years and required special clearance from Canadian regulators since it goes beyond the role of a typical online investor service.

Online investing sites, such as BMO's InvestorLine service, operate as execution-only platforms, meaning they handle trades but don't necessarily dole out specific tips on which equities to trade. "This wasn't done overnight,"said Connie Stefankiewicz, senior vice-president of North American customer contact centres for the bank. "The regulations needed to be adjusted to recognize that this is a new world."

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When adviceDirect launches Monday, it will be the first of its kind in Canada, melding self-service investing with some aspects of a full-service brokerage. Stocks are rated on a scale of 100, holdings are monitored for unseen risks or volatility, and investors are given alerts if their portfolios need to be rebalanced, as well as tips on how best to do it. Investors who want to discuss stocks with a live person can reach a small team of advisers dedicated to their account.

However, the service is pricier than a typical self-serve investing site. Accounts must have a minimum of $100,000, and the fees are 1 per cent annually, but go down as the size of the account increases. Investors are limited to 30 free trades a year, so the site isn't suitable for heavy traders. But Gilles Ouellette, president of BMO's private client group, says the bank will be flexible on that limit should some investors need more trading to rebalance their portfolios.

The bank's strategy is to win a bigger share of the competitive online investing market by giving self-directed investors more data and analysis. "There's a need that wasn't being fulfilled and that's what we think this is going to do," Mr. Ouellette said.

Though BMO is first into this segment of the market, it is expected other banks will follow in the years to come as financial institutions look for ways to build up their fee-based revenue in an era of historically low interest rates.

Ms. Stefankiewicz said the bank doesn't expect the new service will cannibalize BMO's InvestorLine product too much, since many investors still want to direct their own portfolios and don't require detailed advice. However, she said some InvestorLine clients have indicated in surveys they would prefer to tap advisers at certain times without moving to a full-service brokerage.

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