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Transcend Direct is being ushered in as a response to the financial services industry’s new regulatory and technological environment

By Tessie Sanci |

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Transcend Private Client Corp., a subsidiary of Toronto-based portfolio management firm Provisus Wealth Management Ltd., is bringing flexible financial planning and "pay for performance" investing services to individual investors with the launch of its Transcend Direct online platform.

Specifically, the firm will charge clients a fee of 0.25% for the administration of the investment funds the firm uses in its portfolios. If the funds outperform, the firm will charge a performance fee that is equal to 20% of a fund's outperformance compared with the benchmark.

"Provisus will not make any money until the client's [portfolio] outperforms the benchmark," says Chris Ambridge, CEO of Transcend Private Client Corp. and Provisus' president and chief investment officer. "Until the client sees alpha or outperformance, they have a fee of 25 basis points, which is lower than [fees attached] to most [exchange-traded funds (ETF)] in this country."

The firm chose its outperformance fee based on an industry standard of what hedge fund managers charge clients for their services. It also makes the program economically viable for the company and is justifiable based on the successful results Provisus has been able to produce for several years, Ambridge explains.

The program is an offshoot of one that has been available to Provisus' private clients for approximately 10 years, in which clients can begin the investing process with the firm by filling in an online application. The firm is now bringing that model to the mainstream investing public, says Ambridge.

The online process and subsequent consultation with a portfolio manager is similar to what would occur with a traditional Canadian robo-advisor, but Ambridge describes his firm's methods as more detailed than those of other offerings.

Transcend Direct's online application is the first step for any client; following the application, a portfolio manager will get in touch with the client to gather more specific information, which would lead to the development of a customized investment policy statement, according to Ambridge.

"With the traditional robo-advisor, you get a [number of] questions and you're slotted into a box," he says. "In our case, every client will be different."

The firm's portfolios are actively managed and include corporate-class pool funds in addition to an ETF bond mandate. Transcend Direct will also make use of the services of institutional third-party managers.

Clients who invest a minimum of $50,000 in the equity portion of the portfolio are eligible for Transcend Direct's pay-for-performance service.

"Unlike the other robo-advisors that take very small clients, we're not dipping down that low. We feel this is a unique offering," says Ambridge.

Services available within Transcend Direct, which is accessible throughout the country, include goal-based financial planning, financial account aggregation, investment management, portfolio construction, ongoing cash management, portfolio monitoring and constant online access to portfolios.

The firm's original announcement, regarding the platform, which was released early on Tuesday, suggests that Transcend Direct is a response to the financial services industry's new regulatory and technological environment.

"The onset of this new model comes on the heels of a new legal framework, pushing for tighter regulations governing financial advisors. Many feel that greater transparency about how fees are calculated and what portion the advisors receive is required," the announcement states. "With the advent of online financial firms, often known as robo-advisors, it's clear that more Canadians are searching for alternate methods of investing."

Provisus created Transcend Private Client in order to offer these flexible financial planning services. Provisus manages $400 million in private client assets and has been offering investment management services since 2007.

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