Before creating Invisor, I started noticing a significant 'advice gap' in Canada.
Many Canadians walk into bank branches when they need help with investing, but don't realize they typically get 'sold' a bank-owned mutual fund with a very high embedded cost. This means many Canadians end up losing 30 to 40% of their savings simply paying for costs. On top of that, only Canadians that have a certain amount of investible assets (generally $150,000 or more) are offered access to a professional advisor.
I worked in the industry for many years and was aware of the inefficiencies in the process and lack of proper use of technology, which was ultimately costing Canadian investors. From talking to Dan, I realized the same issues existed in the insurance industry.
So we started Invisor, a solution that’s all about simplicity, convenience, low costs, and a holistic wealth management experience (including financial planning and insurance). We leverage technology, while following the same approach and discipline followed by institutions and wealthy Canadians.
My personal story
I once went to a bank branch to discuss a vehicle loan, and was told I had become ‘eligible’ for financial planning services based on the savings I had built up in my RRSP & RESP accounts. At the time I said I wasn’t interested, but it got me thinking. Why does someone have to become ‘eligible’ for financial planning services? Why shouldn’t all Canadians have access to professional financial advisors even if they’re just starting out?
I eventually decided to contact the branch and get referred to an advisor. After going through the experience with a branch-based advisor, I realized four issues:
- There’s a minimum investment threshold below which advisors are reluctant to engage in an advisory relationship (it’s not profitable for the advisor under a traditional face-to-face relationship).
- Bank branches only offer their own mutual funds, and advisors are incentivized to do so. The document I was asked to sign at the time of account opening had a statement in fine print that said the bank had no obligation to recommend a third-party investment product!
- The cost of the portfolio recommended to me was 2.38%, which I considered very high, especially in an economic environment where earning a 6 to 7% return is challenging.
- The entire process of setting up an appointment with the financial planner and agreeing to a recommended portfolio took several weeks.
Despite these issues, many Canadians still walk into bank branches for help with investments. I knew it was time for a change in the investment industry.