Planswell offers clients financial plans based on an online questionnaire. Clients then can sign up for services

By Fiona Collie | March 2017

Planswell, a new Toronto-based financial technology (fintech) firm, is placing a big bet that its online financial planning offering will win clients in an increasingly competitive digital advice marketplace.

Planswell, a startup that has been operating since November 2016, offers potential clients the opportunity to create a free "holistic" financial plan that encompasses investments, insurance and mortgage products by filling out an online questionnaire. Clients then can choose to follow the financial plan on their own, talk to a financial advisor about it or become a Planswell client.

"Our goal is to provide excellent financial plans to as many people as we can around the world, as fast as we can," says Eric Arnold, Planswell's president and CEO.

To get started, potential clients sign up to create a plan on the company's website. They answer about 40 questions relating to their current finances and financial goals. The algorithm behind the questionnaire responds to the answers provided and may refer a client to a previous answer to verify information to construct the plan.

"Every time a question is answered," Arnold says, "it actually recalculates hundreds of thousands of plans in order to pick the one that's most optimized for asset allocation, tax efficiency - everything that gets to your goals in the best way possible."

For example, if a client indicates that she wishes to retire at age 60, but later provides information that suggests she may not be able to do so until age 66, the algorithm may ask the client if she would be willing to work part-time in retirement or postpone retirement.

Once the questionnaire is complete, the client is presented with a one-page plan, free of charge.

Clients who decide to work with Planswell do so through one of its three divisions: Planswell Portfolios, Planswell Insurance Services and Planswell Mortgage Services.

Planswell's investment arm is a registered portfolio manager in Ontario and operates like a robo-advisor; clients' assets are invested in a portfolio of ETFs selected according to the client's profile. The portfolio is rebalanced automatically. The management fee is 0.5% for the service, plus the underlying cost of the ETFs.

The company's insurance arm operates as a managing general agency and has a direct relationship with Assumption Mutual Life Insurance Co. in Moncton, N.B. Clients can purchase life insurance, critical illness insurance and disability insurance. Some robo-advisors, such as Vancouver-based WealthBar Financial Services Inc. and Oakville, Ont.-based Invisor Investment Management Inc., also offer insurance products to their clients.

Planswell's third division, Planswell Mortgage Services, is a mortgage agent, which allows clients to find lenders through a partnership with Hamilton, Ont.-based Real Mortgage Associates Inc.

Planswell has about 30 staff members, including salaried certified financial planners, insurance agents, and mortgage brokers with whom clients can speak regarding their plans.

"We certainly do have people standing by to talk to people who have any questions or concerns," Arnold says.

Canada's fintech space is relatively new compared with other jurisdictions, such at the U.S., but Canada's industry has grown quickly in terms of the number of companies and the services they provide. Industry observers, such as Pauline Shum Nolan, professor of finance with York University's Schulich School of Business in Toronto, are not surprised that new types of business models are emerging.

"This [trend] is adding to other financial planning needs - mortgages and insurance - so I see that as a natural progression [from robo-advisors]," says Shum Nolan, who also is CEO and co-founder of Toronto-based online research platform PW Portfolio Analytics Inc.

As well, retail clients are becoming more comfortable in using digital interfaces - perhaps even more so than dealing with their own finances.

For example, according to Ernst & Young LLP's (EY) 2016 Canadian Consumer Banking Survey, 26% of Canadians believe themselves to be digitally savvy, but only 18% can say the same regarding finances.

Although the expanding services of robo-advisors bring more competition to human financial advisors, there's no need for advisors to close up shop just yet, says Gregory Smith, partner and leader of EY's wealth- and asset-management practice in Toronto: "I think you might have some advisors think, 'Oh, gosh, sure, there we go; robots are doing my job.' But I don't think that's the attitude we should take."

Instead, he says, these emerging platforms could be useful in introducing financial planning to clients who are just starting out, but who may require a more personal level of advice later on when their finances become more complex and their asset levels rise.

For the time being, Arnold says, Planswell isn't looking to partner with advisors or firms who wish to use the firm's technology. However, he is interested in working with advisors with their succession planning.

Arnold wants to work with advisors, either to buy their books in their entirety or just a portion of an advisor's book, such as the smaller accounts, over a period of time. This would allow the advisor to make the transition away from his or her business.

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