Although AI is disruptive for advisors, it has the potential to democratize investment advice and make it easier for investors to access information.ilkercelik/iStockPhoto / Getty Images
Devon Lacombe sees artificial intelligence transforming the world of investing, but she doesn’t see that as a bad thing.
Ms. Lacombe, managing director and head of Scotia iTRADE at Bank of Nova Scotia since last November, has a prime view of the do-it-yourself crowd, the tools at their disposal and what drives them to work with an advisor (or not) eventually.
Devon Lacombe, managing director and head of Scotia iTRADE at Bank of Nova Scotia.Supplied
She spoke with Globe Advisor about how clients are changing and how advisors can adapt to meet their needs.
Tell me about the core group of really engaged DIY investors – how their needs change and the opportunities to provide advice.
We have a very loyal group of iTrade clients who are in that 60-plus range. They’re very sophisticated investors, but they’re now thinking about retirement. They’re thinking about passing down their wealth to the next generation. They’re coming to this time when their financial lives are much more complex.
It’s also important for those clients to create relationships that can persist across generations and know their family has a relationship with somebody who can help manage their wealth into the future. So, we’re seeing an openness and a desire for those types of services from that tranche of older, self-directed clients.
You also have clients who are thinking about selling businesses [and] divestitures. Insurance is another big thing – people thinking about how to leverage insurance.
At the younger end, how are the triggers to seek advice different?
It’s both wealth accumulation as well as life complexity, which often go hand in hand. As you start to get into those core accumulation stages, your life is also getting busier.
I’m in that mid-life phase and I can’t tell you how many of my friends have gone through that experience in which they’re self-directed clients and they finally say, ‘You know what, my investment hygiene has really fallen off. I need somebody to keep an eye on things and keep everything in order.’
[They’re] ready to explore advisory [services] either for the entire portfolio or just for components of the portfolio because there are always opportunities to invest across different channels.
What do advisors need to know if they’re taking on DIY clients who’ve had this independent investing life? What should advisors do differently?
The most important thing is to understand the investing style and opinions of the client. Do more listening up front because these clients have experience investing. They know how they want to invest.
Advisors are probably going to see more and more of that from their clients regardless of whether they’ve been a self-directed investor for a while or not. You’re seeing the next generation of Canadians engage and be less intimidated by investing. The financial literacy in the country has gone up, up, up, and it’s only going to continue.
People aren’t going to advisors because they’re these investing gurus. They’re going to advisors because advisors know investment discipline, investment hygiene and a good financial plan that gives people the security that things are on track. It’s going to be a much more collaborative discussion around what you’re doing with the investments.
Taking care of your client’s financial life is where you’re going to develop those winning relationships. I don’t think that’s ever not been true, but it’s truer than it’s ever been.
We’re probably still in the early stages of DIY and definitely in the early stages of AI. Where do you see the different levels of advice in five years and how investors access humans or move through different advice options?
AI is going to transform the investing space in a positive way. I’m always thinking about how we can democratize investment advice, planning and guidance, and help more Canadians access critical information that can help improve their financial health and their ability to build long-term wealth.
I’m really excited about how AI is going to be able to do that even within our own platform. [For example,] helping distill market news and portfolio insights to a really personalized level – if you think about AI understanding goals and what you’re trying to achieve as an investor and teeing up information proactively to keep you on track for that. That’s amazing, right?
I’m hoping AI can protect a little bit against some of the reduced barriers to trading. Reducing fees is great, but there’s also a danger when you think about clients maybe overtrading or trading in certain types of markets or assets that are riskier. AI has the power to be this amazing guiding light that can help clients grow their long-term wealth within the self-directed space.
[AI also has the power to help us] learn who our clients are and what’s going on with their financial lives and their lives outside of their finances to help nudge clients into an advisory solution if and when that makes sense.
You’re going to see more and more types of advisory solutions at different fee levels with technology. It’s going to force us to change and evolve, but it’s not going to take humans out of the picture.
This interview has been edited and condensed.
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