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Why an advisor-centric model is the disruption the wealth management industry needs

Last week, I moderated a Calgary CFA web event entitled Wealth Disruptors featuring industry experts in the fields of alternative investing, fintech innovation and independent financial services.

These are topics that I’ve spoken about numerous times in the past given that I live and breathe them each day. The latter is of particular interest to me: Canada, due to the oligopolistic structure of our industry, is about a decade behind the U.S. in adopting an approach that favours and supports independent advisors.

However, I think things are about to change, and a lot sooner than many expect, due to greater access and growing demand for products such as alternative investments and low-cost ETFs, not to mention impressive fintech solutions that are vastly improving transparency and the overall client experience.

All of these are real game changers that could ultimately end up draining the protective moats that the big banks have used to dominate the industry. In a way, the progression reminds me of how streaming services such as Netflix gained traction in the United States before shifting north, despite pushback from the oligopolistic telecommunications sector here.

In the fintech space, upstarts are trying to take advantage of the network effect, meaning some form of highly desired product or service is offered at a substantially discounted price in order to attract and build out an ecosystem. Access to a large pool of capital is essential in this high-volume, low-margin space so that companies can make it through the costly ramp-up phase.

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