Advisors: the added value that an algorithm can’t offer!

27 March 2023 by Martin Felton
Advisors: the added value that an algorithm can’t offer!

Over the past year, you may have seen the same phenomenon that I have: investors who had opted for self-directed investment platforms facing market volatility, often for the first time. While these digital tools provide certain benefits and may be suitable for some investors, they don’t offer your personal touch as an advisor. This is a golden opportunity to (re)showcase your expertise!

Self-directed investment: a favourable context

In recent years, several factors have contributed to the surge in self-directed investing.

We have seen the proliferation of easy-to-access online investment platforms and other robo-advisors. Several have reduced or even eliminated fees and commissions, making them even more accessible.

In addition, the pandemic and telework have contributed to their popularity, especially among younger generations.

At the same time, bull markets often offered immediate and attractive returns. This favourable environment led many self-directed investors to believe that this trend would last.

Perhaps this was forgetting the cyclical nature of the markets. And the skills required to take the reins with your investments.

The importance of having the right profile

Self-directed investing may be suitable for some investors, who value the independence, availability, flexibility or affordability of tools designed to democratize investing. However, these benefits are not suitable for everyone and may involve certain risks. For example:

  • Lack of expertise: not having the knowledge, experience or time to make informed investment decisions, which can lead to poor choices
  • Overconfidence: feeling that investing is easy and that it is possible to achieve high returns with little risk or to time the market, which can lead to unrealistic expectations and disappointment
  • Overconcentration: investing heavily in a security or sector and not diversifying your investments sufficiently

The risk of inexperience

When markets dropped in 2022 and volatility set in, newcomers to self-directed investing found themselves in uncharted territory. And many have learned a new reality: when their assets decline and they don't know what to do, they don't always know where to turn for advice.

A robot cannot reassure them. But as an advisor, you sure can!

Not to mention, a negative investment experience can be unsettling for some investors—especially first-generation investors—and deter them from effectively harnessing the potential of markets to build long-term wealth.

“Can I talk to a human please?”

I am convinced that the current context provides a golden opportunity to highlight the unique benefits of your advisory role and to explain to both current and future clients the real value you bring to them.

I would like to remind you that as an investment professional, you are equipped to listen to them, reassure them and avoid hasty decisions, to put market events into perspective and navigate the overflow of financial information available on the web and on social media.

You make your clients benefit from your long-term vision. You guide them in investment choices aligned with their risk tolerance, investment horizon and objectives.

With your reassuring presence and expertise, you can meet your clients’ emotional needs, build trust and give personalized advice. These are valuable assets that an algorithm can’t offer!

Martin Felton is Vice-President, National Sales, at National Bank Investments.

Legal notes

The information and the data supplied in the present document, including those supplied by third parties, are considered accurate at the time of their publishing and were obtained from sources which we considered reliable. We reserve the right to modify them without advance notice. This information and data are supplied as informative content only. No representation or guarantee, explicit or implicit, is made as for the exactness, the quality and the complete character of this information and these data.

The opinions expressed are not to be construed as solicitation or offer to buy or sell shares mentioned herein and should not be considered as recommendations.

National Bank Investments is a signatory of the United Nations-supported Principles for Responsible Investment, a member of Canada’s Responsible Investment Association, and a founding participant in the Climate Engagement Canada initiative.

© 2023 National Bank Investments Inc. All rights reserved. Any reproduction, in whole or in part, is strictly prohibited without the prior written consent of National Bank Investments Inc.


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